The Happiness Formula

  • Happiness is not a single thing, but a collection of variables that when thoughtfully combined can unlock the virtues of innovation, prosperity and generosity.
  • Leveraging our Global Retirement Reality Report (GR3) data, we are examining what makes for retirement happiness, including:
    • Trust in the systems that provide an apparatus for and govern the savings experience
    • Ownership of the individuals who participate in retirement savings
    • Preparedness as expressed by individuals’ confidence regarding their level of retirement readiness

From Organisation for Economic Co-operation and Development (OECD) statistics to the Melbourne Mercer Global Pension Index, there is extensive data measuring savings adequacy and retirement system effectiveness. While these studies provide a quantitative baseline and enable a common starting point, our goal is to look beyond quantitative measures to understand how people truly feel.

Guided by GR3 survey respondents’ retirement realities, we scrutinized the gap between saving sufficiency and sentiment and explored alternative variables to the happiness formula.


Today, many countries moving from a traditional Defined Benefit (DB) structure to a Defined Contribution (DC) model are experiencing transformational retirement reforms that are introducing confusion and doubt to savers; confusion about how the new systems work and doubt as to whether they do. While the systems themselves may be strong and the reforms directed toward public good, savers’ uncertainty erodes this critical dimension of trust.


Beyond believing that the system works, workers must understand and embrace their role within it to truly gain the value that savings structures have to offer. Here, we are defining ownership of the retirement readiness experience not as investment mastery, but instead, as a willingness to be present and engaged in one’s retirement planning.

Within the GR3 survey, we asked a range of questions to ascertain attitudes regarding ownership, and distilled the results into three themes: responsibility, choice and advice.

Responsibility is the governing indicator for ownership and most evident in countries where the DC construct is well-established.

The level of savers’ choice is largely a factor of the savings system, meaning choice scores are higher in mature DC countries and lower in countries still in transition from guaranteed savings structures.Advice, however, offers unique insight. Respondents in the US, Australia and Ireland are much more likely to seek advice, and be prepared to pay for it, than those in continental Europe. This may be partly due to the legacy of the state-based European systems versus individual-centric Anglo-Saxon approaches —though advice and payment appetites don’t strictly follow this assumption, as evidenced by the UK. An interesting aside: While Swedes are reluctant to seek advice, and expect such advice to be free, they rank highest among the continental countries in terms of accepting individual responsibility for retirement saving.


Here preparedness is defined as individuals’ assessment of whether they have enough to support a comfortable retirement. What constitutes enough can be difficult to evaluate, particularly across countries; therefore, we invited respondents to rank their sense of financial preparedness for retirement. The US led with the highest ranking responses, with a third citing extreme confidence.

The Happiness Formula

Accumulated assets play an important role in determining retirement readiness. But as expressed by survey respondents, people in the best-funded systems are not necessarily the happiest. Instead, savers, sponsors and societies would be better served by an examination of and investment in bettering trust, ownership, and preparedness to further confidence, empowerment, and accountability across the retirement savings complex.

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The views expressed in this material are the views of SSGA Defined Contribution as at April 30, 2018, and are subject to change based on market and other conditions.

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 Exp: July 31, 2022