Is $1 Million Enough for Retirement in America?

The Best and Worst Pension Plans Worldwide

Each year, millions of people around the world leave the workforce to retire.

But as the global population grows older, and the COVID-19 pandemic accelerates the already rising number of retirees, there is still a large degree of variance in the quality of public pension plans around the world.

Which countries have invested in robust public pension programs, and which lag behind?

This graphic, using 2021 data from Mercer CFA Institute Global Pension Index, compares retirement income systems worldwide.

How the Index Ranks Pension Plans

Because a country’s pension system is unique to its particular economic and historical context, it’s difficult to draw direct comparisons. However, there are certain elements that pension experts see as universally positive, and that lead to better financial support for older citizens.

As with previous rankings, Mercer and the CFA Institute organized these universal elements into three sub-indexes:

• Adequacy: The base-level of income, as well as the design of a region’s private pension system.
• Sustainability: The state pension age, the level of advanced funding from the government, and the level of government debt.
• Integrity: Regulations and governance put in place to protect plan members.

These three measures were used to rank the pension system of 43 different countries, representing more than 65% of the world’s population. This year’s iteration of the index notably includes four new countries—Iceland, Taiwan, UAE, and Uruguay.

The Full Ranking

When it comes to the best pension plans across the globe, Iceland, the Netherlands, and Denmark have the top three systems.

Iceland’s system ranks high across all three sub-indexes. The country offers a state pension with two components: mandatory contributions from both employees and employers, and optional contributions to state-approved pension products.

Its system has a high contribution rate, which ultimately results in a generous state pension that retirees in Iceland can tap into. The country also has a relatively low gender pension gap, meaning the difference between the average female pension versus male pension is relatively small—especially compared to other OECD countries.

On the opposite end of the spectrum, the Philippines, Argentina, and Thailand scored the lowest on the ranking.

Thailand scores particularly low in the adequacy category, with a score of 35.2. To increase its score, Thailand could increase the minimum payments for its poorest demographic and include more employees in occupational pension schemes.

Recommendations for Better Pension Plans

According to the index, countries seem to be steadily improving their pension systems. From 2020 to 2021, the average score of the overall index increased by 1.0.

With an average of 60.7, the index shows that most countries’ systems have some good features, but they also have some significant shortcomings that could be addressed by the following recommendations:

• Boosting adequacy by increasing coverage, and including more employees in private pensions systems.
• Increasing sustainability by adjusting retirement pension age to reflect increasing life expectancy, and promoting higher workforce participation from older citizens.
• Raise integrity by introducing policies that reduce the gender pension gap and discrepancies amongst minorities.

Countries that implement even a few of these changes could make a huge difference for their next generation of retirees—and those that don’t could be in trouble in the near future.

How Does Your Personality Type Affect Your Income?

You’ve just finished giving a presentation at work, and an outspoken coworker challenges your ideas. Do you:

a) Engage in a friendly debate about the merits of each argument, or

b) Avoid a conflict by agreeing or changing the subject?

The way you approach this type of situation may influence how much money you earn.

Today’s infographic comes to us from Truity, and it outlines the potential relationship between personality type and income.

Through the Myers-Briggs Lens

The Myers-Briggs personality test serves as a robust framework for analyzing the connection between personality and income, in a way that is easily understood and familiar to many people.

The theory outlines four personality dimensions that are described using opposing traits.

• Extraversion vs. Introversion: Extroverts gain energy by interacting with others, while introverts draw energy from spending time alone.
• Sensing vs. Intuition: Sensors prefer concrete and factual information, while intuitive types use their imagination or wider patterns to interpret information.
• Thinking vs. Feeling: Thinkers make rational decisions based on logic, while feelers make empathetic decisions considering the needs of others.
• Judging vs. Perceiving: Judging types organize their life in a structured manner, while perceiving types are more flexible and spontaneous.

For example, someone who aligns with extraversion, sensing, thinking, and judging would be described as an ESTJ type.

The researchers surveyed over 72,000 people to measure these four personality preferences, as well as 23 unique facets of personality, income levels, and career-related data.

Traits With the Highest Earning Potential

Based on the above four dimensions, extroverts, sensors, thinkers, and judgers tend to be the most financially successful. Diving into specific personality characteristics, certain traits are more closely correlated with higher income.

For instance, extroverts are much more likely to have higher incomes if they are quick to share thoughts, have high energy, and like being in the public eye. Thinkers also score high on income potential, especially if they enjoy debates, make rational decisions, and moderate their emotions.

The Top Earners

Which personality types earn the highest incomes of all? Extroverted thinking types dominate the ranks again.

Source: Truity

The one exception is INTJs, with 10% earning an annual salary of $150K or more in their peak earning years.

Personality and the Gender Pay Gap

With all these factors in mind, the researchers analyzed whether personality differences would affect the gender pay gap.

When the average salaries were separated for men and women, the results were clear: men of almost all personality types earn more than the average income for the sample overall, while all but two personality types of women earned less than the average.

Source: Truity

In fact, women with high-earning personality types still earn less than men who do not possess those traits. For example, extroverted women earn about $55,000 annually, while introverted men earn an average of over $64,000.

Maximizing Your Potential

Are the introverted personalities of the world doomed to lower salaries? Not necessarily—while personality does play a role, many other factors contribute to income levels:

• Level of education
• Years of experience
• Local job market
• Type of industry
• The particular career

Not only that, anyone can work on the two specific personality traits most aligned with higher incomes: set ambitious goals, and face conflict head-on to ensure your voice is heard.