The U.S. retirement score has dropped for the second year in a row.
The Mercer CFA Institute Global Pension Index has ranked the U.S. retirement system 29 out of 48 countries and given them a C+ grade. The country’s overall score fell to 60.4 out of 100 which is down from 63.0 last year and 63.9 in 2022. Netherlands ranked first while India came in at the bottom.
Bankrate Chief Financial Analyst Greg McBride said the lower ranking for the U.S. is greatly due to how much the burden for retirement savings is on the individual.
“There are fewer pensions and more of a reliance on things like a 401(k) and other workplace plans where it’s the employee that has to make the contributions,” McBride said.
According to McBride, only about 73% of workers have access to a workplace-based retirement plan. Some experts also say there’s an imbalance between working age people and retirement age people that is affecting the future success of the retirement system in the U.S. As the population ages, the country is shifting more towards retirees and having fewer workers per retiree.
“Our system has moved away from pensions and toward what’s known as ‘defined contribution’ plans where it’s the employee that has to make the contributions through things like workplace-based plans,” McBride added.
Regardless of how the U.S. scores on the Index, McBride suggests Americans should still save often and start saving as early as possible.
“If you got a late start, take advantage of catch-up contributions,” he said. “Also, working longer, delaying social security or even working part-time in retirement is an idea to bridge that gap between the savings you have and what income that’s going to provide in retirement versus what you need to pay the bills.”