Retirement Realities: How Social Security Benefits Compare Internationally

7. Australia: Means-Tested Age Pension

Australia's approach to retirement income is unique, heavily relying on a means-tested Age Pension as its primary social security pillar. Unlike many countries with universal or purely contributory systems, the Australian Age Pension is assessed based on both income and assets, ensuring support is directed to those most in need. This encourages self-funded retirement through mandatory superannuation (employer-provided retirement savings), which is a privately managed, defined contribution scheme. Australia's model emphasizes self-reliance with a targeted government safety net.

8. Chile: The Privatization Pioneer

Chile implemented a radical social security reform in 1981, privatizing its pension system. Workers contribute to individual, privately managed accounts, making it a fully defined contribution scheme. While this model aims for financial sustainability and higher returns, it shifts investment risk entirely to the individual. Other countries have adopted elements of this model, but Chile's experience highlights the challenges of market volatility and ensuring adequate benefits for low-wage earners, offering a stark contrast to traditional state-run systems.