French Retirees Outearn Working Adults
In France, retirees over 65 actually earn more than the average salary of working adults. According to recent analysis from the Financial Times, the average monthly income for pensioners was around 1,626 euros ($1,926) at the end of 2022. Interestingly, retirees are currently making about 2% more than people still in the workforce.
This situation contrasts sharply with retirees in many other countries. For instance, retired Americans earn roughly 16% less compared to their working counterparts, while UK retirees fare slightly worse with about 20% less. And retired Australians? They face the steepest discrepancy, earning about a third less than those who are still employed.
What’s particularly striking is that this trend isn’t new. Between 1970 and 2020, the median income for working-age French citizens (ages 18 to 64) grew by about 100%, yet the income for retirees soared over 160%. It does make you wonder what’s happening elsewhere.
Why French Pensioners Fare Better
One reason French retirees can afford a comfortable life post-retirement could be the milder cost of living and various government policies favoring pension benefits. The national pension scheme allows individuals to receive up to 50% of the average annual income, according to the European and International Social Security Center (CLEISS).
Pension income is derived from contributions, calculated over a person’s 25 highest earning years. It’s essential to remember, though, that to qualify for this national pension, one needs to work for at least 42 years.
Additionally, France has ramped up its spending on pensioners. Since 2001, the share of GDP allocated to benefits and healthcare for older citizens has climbed by approximately 2.9%, compared to just over 1.5% for other similar countries.
In contrast, retirees in other nations are not as fortunate. By 2023, public pensions in France account for about 14% of GDP, while the U.S. hovers around 7%. The benefits in France also tend to be more favorable, with a higher net pension exchange rate compared to that of the U.S.—around 74% versus 50%—which indicates that on average, Americans have less to fall back on after retiring.
Plus, accessing retirement benefits in the U.S. is slower; most Americans can only do so at ages 66 or 67, lagging behind their French peers.
Longer Work Lives for Americans
The less favorable pension plans in the United States, combined with escalating living costs, often compel Americans to work later into their lives. Many feel they must do so to secure a stable retirement.
A survey showed that over 40% of retired Americans—around 20 million people—are anxious that their savings won’t sustain the lifestyle they wish for. It’s concerning that around 60% of American retirees are contemplating taking on side jobs to make ends meet.
Interestingly, while 20% of retirees express feelings of struggle or being “in a nightmare,” there’s also a significant portion who feel they are actually “living the dream.”
French retirees tend to enjoy greater leisure time compared to those in the United States, but this could all change. In fact, discussions around raising the retirement age in France are ongoing. Plans unveiled in 2023 aim to push the retirement age up from 62 to 64 by 2030. President Emmanuel Macron has proposed these changes as a way to align with practices in other Western countries, although he has faced substantial pushback. The financial burden of pensions has grown so significant that it is projected to consume about a sixth of the Ministry of Defense’s budget in 2024.
