An age-old (and old age) problem: Amid French strikes, is retirement better in America

Kim Hjelmgaard, USA TODAY

They've set fire to cars. Clashed with police. Let thousands of tons of rotting garbage pile up in the streets − French workers, activists, students and political opposition parties on Tuesday took part in nationwide strikes and demonstrations over changes to the country's retirement system.

President Emmanuel Macron recently forced through a controversial plan to raise the retirement age in France from 62 to 64. He's doing this in a nation that's long been perceived to take a relatively unique view of work-life balance. There are, after all, those fabled 35-hour workweeks, long lunches and even longer vacations.

The fresh wave of large-scale strikes comes ahead of a bill that will be debated in France's Parliament on Thursday aimed at repealing Macron's reforms. "We are not asking to bring down the government, but to bring down the retirement reform," said Sophie Binet, a union leader, on France's BFM TV on Sunday.

Some protesters briefly occupied the headquarters of the Paris Summer 2024 Olympics on Tuesday.

Photos: Heaps of trash pile up on Paris streets amid protests against France retirement law

Still, do French retirees really fare better than American ones? Direct comparisons are tricky. Not only do the U.S. and France have really different retirement systems. Incomes and the cost of living are different. And there are different cultural expectations and realities about the role of the state in helping to support retirees in other ways.

Here's how France and the U.S. stack up when it comes to retirement.

Two countries, two systems

Protesters protect themselves from tear gas smoke behind umbrellas and garbage containers during clashes on the sidelines of a demonstration against pensions reforms in Paris on April 6, 2023.
Protesters protect themselves from tear gas smoke behind umbrellas and garbage containers during clashes on the sidelines of a demonstration against pensions reforms in Paris on April 6, 2023.

  • In the U.S., retirement income can come from a combination of Social Security benefits, company-sponsored programs such as a 401(k), an individual retirement account (IRA), profit-sharing schemes or another type of private, tax-advantageous retirement savings plan. Social Security benefits are based on earnings history, dependent on the age at which the benefits start and indexed to inflation. Pension plans such as a 401(k) and IRA are entirely voluntary. Employee contributions can be matched by an employer. They aren't always.The average Social Security retirement benefit in 2023 is an estimated $1,827 a month, according to AARP, an independent non-profit organization that focuses on issues affect older Americans.

  • France's retirement system is made up of three basic parts: a state pension, a mandatory supplementary pension program for private industry workers, and separate voluntary private pension plans. The value of the state pension is calculated using variables such as average yearly earnings and the total period of contributions. Employees and employers both contribute to the compulsory supplementary plan on a pay-as-you-go basis. Voluntary private pensions represent a relatively small part of the French retirement market.The average monthly state pension payment in France is about $1,327, according to France's Centre of European and International Liaisons for Social Security, or Cleiss. This figure does not include payments from the required supplementary program or other private plans. And French workers, on average, earn about $43,000 per year compared to the $60,000 in the U.S., according to OECD figures from 2021.

'When I'm 64': Why France is in revolt over retirement changes

  • Access to Social Security retirement benefits in the U.S. can take place from 66 years for those who are born in 1955, gradually rising to 67 for those born in 1960 or later, according to the Social Security Administration. Early retirement is available for Americans at age 62 with reduced Social Security benefits.

  • In France, the retirement age for the state pension is 62 for those born in or after 1955. From September, it will rise to 64 for those born in or after 1968. Early retirement is available at age 58 if certain criteria are met.

  • The average retirement age for a person living in an OECD country − as of 2020, based on entering the labor market age 22 − is 63 years for women and 64 years for men. The lowest OECD retirement age: Turkey, 49 and 52 for women and men, respectively. The highest: Iceland, Norway, Israel (men only): 67.

Net pension replacement rate: What is it and why is it important?

  • Experts say one of the most important concepts to keep in mind when thinking about maintaining a standard of living in retirement is known as the net pension replacement rate. This is the percentage of average post-tax income received over someone's working life. The is a measure that reflects disposable income.

  • In the U.S., the average net pension replacement rate is 50%, according to the OECD. This means that if during someone's normal working life they earned, after tax, $2,000 per month, in retirement they'll typically earn $1,000 each month. In France, the average net pension replacement rate is 74%. So that $1,000 post-tax monthly income in the U.S would be $1,480 in France. South Africa has the lowest net pension replacement rate of any OECD country, at 16%. Brazil, at 97%, has one of the highest. The OECD average is 62%.

  • The National Academy of Social Insurance, a Washington, D.C.-based independent non-profit organization, says retirees need a net replacement rate of between 70% and 80% to maintain their standard of living. Social Security benefits typically account for 40% of this amount, according to the Social Security Administration.

An age-old problem: Old-age income poverty

  • The OECD defines income poverty as having less than 50% of a median household's disposable income. On this measure, 18% of Americans aged 65 or older live in retirement poverty. The figure for women is higher than for men, 26% to 20%, respectively. In France, 8% of those aged 65 or older live in retirement poverty. France spends about 14% of its GDP on public pensions; the U.S. spends 7%. "There's no doubt that the French retirement system is more generous than the U.S.," said Monique Morrissey, an economist at the Economic Enterprise Institute, a Washington, D.C. think tank. Morrissey said that the U.S. was an "outlier" when it comes to retirement for a variety of reasons. One of them: "We know that a typical person retiring in the U.S. has insignificant or nothing in their retirement accounts."

This article originally appeared on USA TODAY: Retirement in France vs. US: In wake of strikes, who has it better?

Advertisement