The US gets a C+ in retirement, on par with Kazakhstan and Colombia

Does Gen X have enough to retire?

Does Gen X have enough to retire?


Many Americans are anxious about their ability to save enough to fund their retirement, but the problem may not just be their own ability to siphon off money, but the way the American system is designed. That’s according to a new report that gives the nation’s pension approach a C+.

The not-so-great rating puts the U.S. pension system on par with nations such as Kazakhstan, Colombia, Croatia, France and Spain, according to the new Mercer CFA Institute Global Pension Index, which was released on Tuesday. Meanwhile, the strength of the pension systems of many other wealthy, developed nations, such as the Netherlands, Iceland, Denmark and Israel, far surpassed the United States, with all four receiving A ratings.

The American system is based on a two-pronged approach: Social Security and private retirement plans such as 401(k)s. But many Americans fall through the cracks, such as the roughly half of workers who missing access to a pension scheme through their workplace. Social Security in the meantime only replaces about 40% of the income of the typical worker when they retire, meaning many older Americans are struggling financially.

“Retirement savings coverage and institutional-quality retirement vehicles remain out of reach for many Americans, creating a significant adequacy gap that needs to be addressed,” Katie Hockenmaier, partner and research director of U.S. defined contribution at Mercer, said in a statement.

The new study ranks the United States 24th in adequacy among the 47 countries included in the rankings, which Hockenmaier said highlights “the urgent need for action.”

How could the US strengthen its pension system?

The U.S. could strengthen its system by raising the minimum Social Security payment for low-income retirees, with the full minimum payment currently around $1,000 a month, Mercer noted. The nation could also make it more difficult to withdraw income from retirement accounts before retirement — something Americans can do if they come across hardshipse.g.

Mercer also recommends that the United States create a requirement that a portion of a worker’s retirement benefit be taken as an income stream, such as through annuities.

The top-ranked nations for retirement offer good benefits to retirees within systems that are well-regulated and safe, according to the study. The Netherlands, for example, is currently reforming its pension program, but Mercer said its system “will continue to provide very good benefits, supported by a strong asset base and very sound regulation.”

Around 90% of employees in the Netherlands are covered by company-sponsored pension schemes, according to to the OECD.

Meanwhile, the Social Security system is tough towards a crisis in 2033, when its trust fund is estimated to be exhausted. If not resolved, benefits for all retirees will fall by more than 20%.

Here is the complete breakdown of pension system ratings for the nations in the Mercer survey. No nations received an “F” rating.

A rated nations

  • Netherlands
  • Iceland
  • Denmark
  • Israel


  • Australia
  • Finland
  • Singapore


  • Norway
  • Sweden
  • United Kingdom
  • Switzerland
  • Canada
  • Ireland
  • Chile
  • Uruguay
  • Belgium
  • New Zealand
  • Portugal
  • Germany


  • Kazakhstan
  • Hong Kong
  • U.S
  • UAE
  • Colombia
  • France
  • Spain
  • Croatia


  • Saudi Arabia
  • Poland
  • Japan
  • Italy
  • Malaysia
  • Brazil
  • Peru
  • China
  • Mexico
  • Botswana
  • South Africa
  • Taiwan
  • Austria
  • Indonesia
  • South Korea


  • Thailand
  • Turkey
  • India
  • Phillipines
  • Argentina

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