The U.S. retirement system has been given a C+ grade and ranks No. 29 out of 48 global pension systems, according to the annual Mercer CFA Institute Global Pension Index. This ranking is lower than many would hope for, indicating that there is room for improvement in the U.S. retirement system.
One of the key factors contributing to the U.S.’s lower ranking is the lack of access to workplace retirement plans for a significant portion of the population. Only about 72% of private sector workers have access to a retirement plan, and even fewer participate in them. This lack of access to retirement savings options can have a negative impact on financial security in retirement.
Additionally, the U.S. allows for more “leakage” of retirement savings compared to other top-ranking countries. This means that individuals may be able to withdraw funds from their retirement accounts before they reach retirement age, reducing the amount of savings available in old age.
Social Security plays a crucial role in providing income for retirees, with about nine out of 10 Americans aged 65 and older receiving benefits. However, the minimum benefit provided by Social Security in the U.S. is lower than in countries like those in Scandinavia, which have public retirement programs that offer more robust benefits.
To address some of these issues and improve the U.S. retirement system, policymakers have implemented initiatives like auto-IRA programs in 17 states and federal laws like Secure 2.0. These programs aim to expand access to retirement savings options and strengthen the overall retirement resiliency for Americans.
At Extreme Investor Network, we understand the importance of a solid retirement plan and provide valuable insights and resources to help individuals improve their financial future. Stay tuned to our blog for more tips and strategies on how to secure a comfortable retirement.