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.
E.J. Smith - Your Survival Guy
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