How We Can Save (for) Our Future

Retirement systems worldwide are currently under strain.
While examples of progress made to improve systems are
numerous, further reforms are required in many parts of
the world to ensure they are sustainable, inclusive and able
to provide future generations with financial security in their
retirement.
Over the last two years, the World Economic Forum has
been working with experts from around the world to assess
the challenges facing retirement systems globally (covered
in the 2017 White Paper, “We’ll Live to 100 – How Can
We Afford It?”) and exploring the solutions that can be
implemented to close the savings gap (focused on in this
paper).
The retirement savings gap is a global challenge
The magnitude of the global retirement challenge was
highlighted in the previous paper, in which the shortfall in
pension savings (the retirement savings gap) for the eight
largest pension markets was estimated at $70 trillion. While
improvements in longevity should be celebrated, longer
lifetimes are ultimately increasing the cost of retirement, and
hence the savings gap is projected to increase significantly.
If measures are not taken to increase overall levels of
savings, this gap is projected to grow to $400 trillion by
2050.
Figure 1: Size of the retirement savings gap, 2015-2050 (trillion $)
Key challenges facing retirement systems include:
– Greater longevity, resulting in higher levels of savings
required to sustain longer lifetimes and ageing
populations, putting a strain on the sustainability of payas-you-go
systems
– Increasing responsibility for individuals to ensure
adequate retirement income, largely driven by trends
among governments and employers to move away from
traditional defined benefit (DB) systems towards defined
contribution (DC) systems. Also, trends in labour markets
are resulting in less traditional employment patterns and
more contingent and self-employed workers who are
unlikely to have access to employer-facilitated plans
– Low levels of savings by individuals
– Poor financial literacy in an environment where
responsibility has shifted to individuals
– A lower expected investment return environment,
placing more importance on the level of contributions
– Lack of access to savings vehicles – one of the biggest
barriers to saving for retirement.

Fuente: weforum

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