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Which countries have the best retirement system? Where does the US rank?

The world’s population is aging, and this has implications on how people’s life will be like when they retire. How good is the retirement system in the US?

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Retirement is a tricky situation to judge perfectly. Every nation in the world has different systems in place to help seniors make the decision, or perhaps guide them in the way the state prefers.

A new study, carried out by a human resources consulting firm named Mercer, has been looking at retirement options around the world. The Mercer CFA Institute Global Pension Index. To come to their conclusions, which analysed retirement in 47 countries, the company looked at three aspects of retirement: adequacy, sustainability, and integrity. Each nation was given a mark for these three aspects which then contributed to an overall score.

The retirement ratings in full

A: Netherlands, Iceland, Denmark, Israel

B+: Australia, Finland, Singapore

B: Norway, Sweden, UK, Switzerland, Canada Ireland, Chile, Uruguay, Belgium, New Zealand Portugal, Germany

C+: Kazakhstan, Hong Kong, SAR, US, UAE, Colombia, France, Spain, Croatia

C: Saudi Arabia, Poland, Japan, Italy, Malaysia Brazil, Peru, China, Mexico, Botswana, South Africa, Taiwan, Austria, Indonesia, South Korea

D: Thailand, Turkey, India, Philippines, Argentina

To little surprise, northern European countries rank highly. The Netherlands had the highest score of 85. It has flat-rate public pension and near mandatory earnings-related occupational pension schemes. This gives the Dutch a healthy and long-standing retirement plan of which 90% of people are covered by.

The US ranked a paltry 22 out of 47.

Why is the US ranked so low?

Mercer notes that the US’s score could be improved by:

“Raising the minimum pension for low-income pensioners”. Average payments for all retirees enrolled in the Social Security program increased to approximately $1,827, while the minimum is around $1,000 a month. Neither is a lot to live on in the US. The National Council on Aging reported that in 2022, around a third of all seniors lived in poverty on incomes below 200 percent of the federal poverty line of $27,180.

“Introducing a requirement that part of the retirement benefit be taken as an income stream” is an important recommendation. Annuities can be used as a means of creating a guaranteed stream of income after retirement. Fixed annuities provide a predictable and stable income, making them suitable for retirees seeking to avoid market risk.

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