It’s More Important than Ever to Save Til It Hurts

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According to the most recent reading of the Mercer CFA Institute Global Pension Index, the United States has come in at 22nd place among 47 countries in terms of retirement security. The big problem? The long-term solvency of Social Security. Oyin Adedoyin reports for The Wall Street Journal, writing:

In a new ranking of the world’s retirement systems, the U.S. scored a C+, falling further behind the Netherlands, Australia and Sweden.

The U.S. came in 22nd out of 47 countries, according to the latest Mercer CFA Institute Global Pension Index, released Tuesday, with a slightly lower score than a year ago. The way Americans fund their retirement is primarily through Social Security and savings in 401(k)s and individual retirement accounts. That setup has some major shortcomings, particularly when it comes to long-term solvency, the report said.

“In the U.S., there’s good coverage of white-collar workers through employer systems. But what about the gig workers? What about the blue-collar workers?” said David Knox, a senior partner at Mercer and lead author of the report.

In many countries, including the U.S., an ever greater share of the responsibility for retirement security now rests on individuals, said Margaret Franklin, president and chief executive of the CFA Institute.

The index factors in both government and private-sector sources of retirement income, and also considers the impact of homeownership and household debt on retirement finances. The index ranks the best retirement systems, not necessarily the best places to live in retirement.

Employers in the U.S. aren’t required to provide retirement plans to all workers. Automatic enrollment in 401(k) plans has helped improve participation and boosted total retirement savings. But many Americans don’t have access to a 401(k) or choose not to put money into individual retirement accounts on their own.

American retirement savers also can withdraw savings early, shortchanging their future security.

Action Line: Now more than ever, it’s important to save til it hurts. It’s also important not to make big mistakes with your retirement money. Click here to download Your Survival Guy’s free special report on the Top 10 Investing Mistakes to Avoid.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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