The U.S. retirement system dropped in a global ranking for the second year in a row. It came in 29th out of 48 countries in the Mercer CFA Institute Global Pension Index. The overall score dipped to 60.4 out of 100, down from 63.0 last year and 63.9 in 2022.
This was also below the average score of 63.6.
Scores declined in every subcategory that makes up the overall score. The largest drop was in adequacy, which includes benefits provided by current pension systems. The U.S. adequacy score was 63.9, down from 66.7 last year and below the 64.9 average.
The U.S. provides a benefit of 15.6% of the average worker’s earnings for the lowest-income workers at retirement. Dr.
U.S. retirement system struggles
David Knox, lead author of the index, said, “The better systems have a figure of at least 25% of the average wage.”
Retirement systems are under stress as fewer people enter the workforce and life expectancies increase.
Graham Pearce, Mercer’s Global Defined Benefit Segment Leader, said better access to retirement plans is key. In the U.S., only 52% of the working-age population has a retirement account. “In the better systems, that figure is more than 80%,” he noted.
The report also found that many U.S. gig and contract workers have been left out of traditional retirement plans. The U.S. needs to boost financial education and provide access to good-quality independent financial advice. The top three countries in the research are the Netherlands, Iceland, and Denmark.
The bottom three are India, Argentina, and the Philippines.
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