Are you considering retirement in Hungary? It’s worth thinking twice
With Hungary’s pension system ranking in the lower middle range, an ageing population and economic pressures are raising concerns about long-term sustainability. Those considering retirement in Hungary must take proactive steps, as relying solely on state support may no longer be enough. Planning ahead and boosting personal savings will be key to securing a stable and comfortable future.
Pension systems evaluated
As Piac és Profit writes, Allianz has once again evaluated 71 pension systems worldwide using its Allianz Pension Index (API), highlighting the growing pressure for reform. The Global Pension Report assessed countries based on demographic trends, fiscal stability, and the sustainability of their pension systems, including contribution periods and funding. The findings reveal a global need for reform, with the overall score rising slightly from 3.6 in 2023 to 3.7, indicating increasing strain. Denmark ranks with a score of 2.3, followed by the Netherlands and Sweden at 2.6, thanks to their well-structured funded schemes.
Understanding these rankings is crucial for those considering retirement in Hungary, as pension sustainability varies significantly by country. While Denmark and Sweden have solid systems, Japan stands out in fourth place (2.7), largely due to its unique approach. Many of its elderly population continue working well into their late 60s. This trend suggests that higher retirement ages may become more common worldwide. As pension systems evolve, retirees looking for financial security must carefully assess the long-term stability of their chosen destination.
Retirement in Hungary
Hungary’s pension system ranks in the lower middle range with an overall score of 3.9, highlighting concerns over its long-term sustainability. Like many European nations, Hungary faces demographic challenges, with the old-age dependency ratio expected to rise from 32% to 47% in the next 25 years. The report suggests that improving employment opportunities for older workers could ease some of this pressure. However, a cultural shift is also needed, as many nearing retirement in Hungary have been accustomed to state support without actively planning their financial future. With a shrinking workforce, individuals will need to take greater responsibility for their own retirement savings.
Thinking ahead
Starting early is key, as even Generation X must save significantly to maintain their standard of living in later years. The Allianz pension report estimates that younger generations in the euro area are collectively saving EUR 350 billion less than required annually. While this figure may seem alarming, the analysis suggests that a 25% increase in savings rates could help bridge the gap. For those planning retirement in Hungary, building personal savings and exploring supplementary pension options will be crucial in ensuring long-term financial security.
Read also:
- The big showdown: Is life better in Romania than Hungary?
- Will it be more favourable to be a pensioner in Romania than in Hungary? Here’s what the expert says
Featured image: depositphotos.com