People often don't think about retirement until they are nearing the end of their working life. But our analysis shows that relying purely on mandatory pension systems no longer makes sense, as they only insure a minimum income to cover basic needs in old age. No matter where in the world you live, you are likely to face a pension gap – in other words, your costs will exceed your retirement "income".
So what can you do? In short - start saving for retirement as early as you can.
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Calculate it: How much do you need to save?
Use the tool below to find out what your pension gap is, based on your income and lifestyle preferences.
What lifestyle are you aiming for?
I want to be able to cover basic expenses for groceries, rent and possible medical treatments, and still have some money left over for a few activities a month.
I want to live in a comfortable apartment in a good neighborhood, and in addition to basic expenses, I want to spend money on leisure activities such as travelling, going out for dinner, or pursuing cultural and sports activities.
When I'm not at my house overlooking the lake, I would like to travel the world, stay in upscale hotels and go out for dinner whenever I want. Since I will have more time, I'd like to explore new hobbies, shopping, splurge on gifts, and donate to a good cause.
Please describe your situation today – your approximate age, location and income in your chosen currency.
I live in
My age is
My yearly gross salary is
Your estimated financial situation based on input you provided. Feel free to adjust where necessary.
Your situation today: years old, , income
Monthly cost of living
Personal care & services
Gifts & donations
What does this mean for your retirement?
Your situation today: years old, , income
How would your retirement situation look like in another country?
Simplified model for illustrative purposes only.
- Please note that this is an abstract model and is created for demonstration purposes only. For a personalized analysis of your situation please contact your UBS client advisor.
- FX conversion rates are based on spot rates as of Friday, 13. October 2017.
- Calculations assume a single person. It does not take into account any child or marriage benefits or modifications to the mandatory pension system.
- Calculations are based on your current salary. Future and historical salary is based on your input of current salary, using inflation and productivity adjustments.
- Calculations assume you entered the workforce at age 20 and you leave the workforce at the statutory retirement age and you have worked continuously during this time.
- Any economic numbers are based on long-term future expectations of UBS economists.
- All calculations assume a certain investment return based on UBS capital market assumptions. Past performance is not a predictor of future return.
- All calculations assume a life expectancy equal to that of our average Jane in the report.
- All calculations are based on the mandatory pension system and any guaranteed social security supplements, if applicable.
- All calculations are based on current knowledge and numbers, e.g. the current prevailing retirement age. Such numbers might change in the future and would change the result of our abstract model. Tax rates are based on the average tax rate.
- German calculations are based on a person living in a former west German Bundesland.
Good news. You can afford to retire here with little savings effort.
You could afford to retire here, but you need to save a considerable amount of your current income.
You most likely can't retire here, as the required monthly savings amount exceeds your current monthly income.
Preparing for retirement: a 50-year-old Jane across the world
In order to compare pension gaps globally, we calculated the retirement income and costs of a representative 50-year-old "Average Jane" in different countries.*
Jane earns a median full–time wage and enjoys a basic urban lifestyle. She has had a good life but has not saved for anything more than a rainy day until now. At age 50, she still has at least 10 years of work left before she retires. We found that no matter where the representative Jane lives, the mandatory pension system will not provide her with enough income to lean back and relax. To close the pension gap, Jane would need to start saving a certain percentage of her income each month. Below is a country comparison.
*For full methodology, please download the full report.
Jane's retirement income is influenced by three global trends that affect pension systems worldwide in one way or another: demographic change, public finances and low interest rates. Below we list some country highlights.
Switzerland ranks highest on our pension gap index. It is one of the few countries with two mandatory pillars financed by workers and employers. But can it sustain the longest living population in Europe?
Japan has the highest life expectancy, and its pension plan is feeling the burden of an aging population. Will current reform measures suffice to meet future challenges?
Germany enacted reforms – like other European countries – and raised its retirement age to 67 as a consequence of an aging population. But there are still differences between the former East and West.
Italy introduced major reform, moving from a generous defined-benefit plan to a defined-contribution plan. Given high public debt, the former was no longer sustainable. Is this a role model for others?
France has more than 30 different pension schemes. Will President Emmanuel Macron be able to push for reform to unify them and decrease the administrative burden?
Australia has an employer-based, defined-contribution plan, supported by a means-tested government pension. It is a lean and sustainable system. But what are the prospects it provides to its recipients?
Hong Kong introduced a mandatory defined-contribution fund only in 2000, and exemplifies the impact of a late start to retirement planning.
Canada has recently introduced reforms that will increase public pension payments. Is this sustainable?
Taiwan has the lowest retirement age. Its example illustrates how working a few years longer can make a significant difference.
- While it is never too late to start thinking about your pension, the earlier you start, the better your prospects for a secure and enjoyable retirement. Over the numerous years that you spend in the workforce and can save for retirement, the compound interest effect will be substantial.
- As your savings grow, it's important to invest them in a smart and diversified way.
- Don't forget about pension systems all together – many provide additional voluntary savings options, combined with tax incentives.