Born in the USA

We’re on our annual holiday to the U.S. (arguably the home of FIRE) doing a road trip of the Western states. We’ve currently stopped in Scottsdale, Arizona, which is essentially one massive shopping mall and seems to offer a pretty pleasant lifestyle – if you have the cash. And, from what we can see, there’s a lot of it about, judging by the Porches, Bentleys, Ferraris and Range Rovers being driven around. A lot of them are driven by pensioners too, which made me wonder what the average pension income is like over here for the “average” American? A quick search on Google brought up this:

Avg US Pension

You have to say that this looks quite good – a median income of $47k, or almost £35k a year for those households aged between 65-74. From the article, it looks as if the State Pension part is somewhere around $12,000 a year, not dissimilar to what we receive in the UK, and the rest will be coming, I assume, from private pensions, employment and investments. (as an observation, there do seem to be a lot of older workers here, in department stores, restaurants and the like.)

The next big question – here in America – will be how much is your medical insurance out of that? At this point, I’ll stop the comparisons because there are far too many differentials to take into account in comparing the US and UK, but given that the US possibly inspired FIRE, I thought it was worth a look see.

In my Google search though, I found that the definitive report on comparing pensions worldwide is done by an Australian consultancy – Mercer – and they came up with this ranking of countries in 2016.

pension ranking

I’m not a big fan of data, really, in the sense that I see it as “the drunk holding onto the lamppost” – it’s used more for support than illumination. Choose your argument and then pick the data that shores it up. Singapore scores highly, but I wouldn’t want to retire there, thanks very much. Too crowded, too hot, too controlled, too far away. I’d be sitting in Raffles Bar, pining for home and a decent pint in decent pub, which is what I was doing years ago when I visited the place.

All the same, it’s an interesting analysis and at the very least it’s good to know that someone is taking a serious look at this as society grows older (I’d read recently that Japan is doing some pioneering work on the pension funding issue with reference to its ageing population, but it doesn’t score well here.)

I should read the whole report I suppose, but Ye Gods I’m on holiday! Plus I’ve already decided that I’m not going to retire abroad, one of the subjects frequently up for debate in FIRE discussions. No doubt I’d have a great standard of living in Panama or the Philippines but so what? You’d never be a local, you’d always be an “ex pat” along with the rest of them, an outsider wondering when and if you’d ever feel fully settled in an adopted homeland later in life.

Having longtime friends, family and a community that you’re settled in is supposed to be worth its weight in gold in retirement and I suspect there’s a lot of truth in that. Britain’s not perfect, but it’s home and it’s funny how much I miss it when I’m away. As I sit here writing this, incessant American news coverage of the Royal Wedding drones on in the background, but even that can’t spoil some of the scenery being broadcast of Windsor and England in the sunshine. “That lot won’t have to worry much about their pensions”, I muse to my wife, who rolls her eyes and tells me to go and get a beer. 

Good idea.

2 thoughts on “Born in the USA

  1. Scottsdale is for the very wealthy and is atypical of the American retiree community. If you are interested is seeing how very many (upper) middle class Americans retire, however, you only need to drive to an adjacent suburb…one of the “Sun cities”. These are planned communities for those 50+, and built around golf courses. (Come June, many of these “snowbirds” will repack their bags and return to Michigan, Chicago, or Winnipeg because the heat is unbearable.)

    Note too that, in the first table, the median income is only about 2/3rds of the mean. If I recall my stats courses correctly, this seems to indicate that there are some very wealthy americans that skew the retirement distribution.


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