Europeans Retiring Younger Than Their 'Standard' Retirement Age

by: Jacob Steinberg

Compared to the rest of the world, European nations have lower retirement ages. This is even a bigger issue when we consider the fact that Europeans have a longer expected lifespan than most of the world due to free access to high-quality healthcare. In most countries in eurozone, the retirement age fluctuates between 60-65 whereas, life expectancy fluctuates between 77 and 83 years. This means each retiree enjoys a retirement of 13-20 years, which is very long compared to an average work life of 35-40 years. Basically, Europeans are able to enjoy 1 year of retirement for each 2 year employment period.

As this wasn't bad enough, statistics show that many Europeans actually retire even younger than these ages. According to EuroStats, in every European country except for Sweden, Denmark and Finland, at least a third of the population retire before age 55, while in these countries, a fourth of the population retires before this age. In countries like Poland and Slovakia, more than half of people retire by age 55.

In all of European Union, only 68.6% of the population between ages 20 and 65 holds a job, including part-time employees. Between ages 50 and 55, only 61% of Europeans hold a job, whereas 39% are already retired. Considering the fact that every third person in Europe is over age 55, this is very alarming.

Below is a table showing employment rates by age groups in European countries. Even though the employment rate of the population increased since year 2000, it is still alarmingly low.

The demographic trends regarding Europe aren't bright. I would be very cautious about investing in companies originating in Europe in the long period unless those companies are multinational entities like BP (NYSE:BP).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.