Global Retirement Systems Evaluated: Netherlands Tops List & U.S. Scores C+

As retirement dreams often involve travel, new hobbies, and quality time with family, financial concerns, especially related to health insurance, can loom large. Economic challenges like the cost-of-living crisis, inflation, and interest rates further complicate retirement plans.

The Mercer CFA Institute Global Pension Index for 2023 sheds light on the varying landscapes of retirement income systems worldwide. Topping the list are the Netherlands, Iceland, Denmark, and Israel, all receiving an “A” grade for their robust and effective retirement systems.

In contrast, the U.S. secures a “C+,” ranking 22nd on the list, trailing behind major economies. Joining the U.S. in this grade are countries like Kazakhstan, Colombia, France, and Spain, which, while having positive aspects, also face significant risks and shortcomings.

The report suggests improvements for the U.S. system, including stricter restrictions on accessing pension funds before retirement and an increase in the minimum pension for low-income pensioners. It also recommends introducing a requirement for part of the retirement benefit to be taken as an income stream.

The evaluation considers over 50 factors, ranging from government support and benefits to local economic growth, addressing concerns about retirees’ support and the long-term sustainability of the systems. The U.K. outpaces the U.S., securing 10th place with a “B” grade, indicating room for improvement. Canada, New Zealand, and Germany share this ranking.

Notably, retirement destinations like Mexico, Indonesia, and South Africa receive a “C” grade, trailing behind the U.S. Countries with a “D” grade, including Thailand, Turkey, India, the Philippines, and Argentina, are deemed to have “major weaknesses” in their retirement systems, challenging the dreamy retirement narrative.