The U.S. retirement system received a C+ grade again this year, but its score dropped for a second year in a row in a new ranking of global retirement systems.
The U.S. system, which is funded mostly by individual retirement accounts (IRA), 401(k)s and Social Security, came in 29th out of 48 countries, according to the Mercer CFA Institute Global Pension Index, released Monday. Its overall score dipped to 60.4 out of 100, down from 63.0 last year and 63.9 in 2022. It was also below the overall average of 63.6.
U.S, scores declined in every subcategory – adequacy, sustainability and integrity – that make up the overall score. But the largest drag was from adequacy, which includes benefits provided by the current pension systems, and design features that can potentially improve the likelihood that adequate retirement benefits are provided.
The U.S. adequacy score was 63.9, down from 66.7 last year and below the 64.9 average of all countries examined, putting it at number 30 out of the 48 countries examined.
The U.S. provides a benefit of 15.6% of the average worker’s earnings for the lowest-income workers at retirement, according to the Organisation for Economic Co-operation and Development (OECD) data. “the better systems have a figure of at least 25% of the average wage,” said Dr. David Knox, lead author of the Mercer CFA Global Pension Index, Actuary and Senior Partner at Mercer.
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