In the recent Mercer CFA Institute Global Pension Index, the U.S. retirement system received a C+ rating, highlighting its vulnerabilities and need for improvements to ensure retirees’ future security.

This evaluation placed the United States 22nd out of 47 countries, aligning its performance with nations like Kazakhstan, Colombia, and Spain. Experts in the report point out significant inadequacies in areas such as access to retirement plans and reliance on the “three-legged stool” model—Social Security, pensions, and personal savings—which has proven increasingly insufficient for many Americans​.

Being an American is such an embarrassment. France considered changing the age of retirement from 62 to 64 and they got a MILLION workers organized. Retirement age in the US is 67 🙂 pic.twitter.com/bdlmqGkkpL

— Lia (@socialistsloots) January 20, 2023

The assessment, part of Mercer’s annual benchmarking of global retirement systems, focused on three primary metrics: adequacy, sustainability, and integrity.

The U.S. scored 63.9 in adequacy, which considers aspects like benefits and government support; however, sustainability and integrity scores fell to 58.4 and 57.5, respectively. These scores reflect the challenges facing the American system, where Social Security alone cannot fill the retirement income gap. In fact, many Americans are left without access to employer-provided retirement plans, resulting in a limited ability to save adequately for retirement​.

A closer look at the global index reveals that the U.S. falls significantly behind countries with A-rated retirement systems, such as the Netherlands, Denmark, Iceland, and Israel.

These nations have achieved top scores due to their robust benefits and sustainable structures. In contrast, the U.S. struggles with “pre-retirement leakage,” where funds are often withdrawn before retirement age, reducing long-term savings. Addressing this issue through policy changes, such as reducing hardship withdrawals, is recommended to improve retirement readiness among Americans​.

Experts also suggest the adoption of annuitization options in defined contribution plans, which could provide retirees with more predictable income. Although recent legislative updates like the SECURE Act aim to offer more flexibility, further measures to enforce annuitized retirement options are seen as essential for enhancing income stability post-retirement.

The Mercer study underscores the need for a stronger alignment between private savings and public retirement income to alleviate potential shortfalls as retirement demographics continue to shift​.