Rosalind Evans
Retirement is a time of life that many look forward to, a time when people can relax and enjoy the fruits of their labour. However, the quality of one’s retirement often hinges on the strength and generosity of the country’s retirement system. The latest Mercer CFA Institute Global Pension Index has shed light on which countries offer the most financially adequate retirement plans, ranking Portugal, the Netherlands, and Iceland at the top, with the United States lagging in 24th place.
Portugal was ranked at the top of Mercer’s list and second for comfortable retirement according to U.S. News & World Report’s Best Countries ranking. The retirement age in Portugal is 66 years and seven months, but it is set to decrease by three months this year. The country’s cost of living is 29% lower than in the United States, and it boasts a top-notch healthcare system and golden visas for real estate or scientific research investments. The Netherlands was ranked first overall, requiring a private and public pension account for all workers. Although the cost of living in the Netherlands is 10% higher than in the United States, it offers universal healthcare and a strong pension structure. Iceland, ranking third for adequacy, provides a basic state pension and a pension supplement, with a retirement age 67. Iceland also offers universal healthcare and relatively inexpensive rent.
The United States, on the other hand, has a retirement system primarily funded through 401(k)s, individual retirement accounts, and Social Security. This system benefits white-collar workers but often leaves blue-collar and gig workers struggling to save enough for retirement. A recent Bankrate survey revealed that 56% of Americans feel behind on retirement savings, with a quarter admitting to having yet to make retirement contributions in at least a year. The United States scored a C+ on the Mercer index, indicating a system with good features and significant risks and shortcomings that must be addressed for long-term sustainability.
The latest Mercer CFA Institute Global Pension Index highlights the significant disparities in retirement systems worldwide, with Portugal, the Netherlands, and Iceland leading the pack in providing financially adequate and generous retirement plans. The United States, on the other hand, has much room for improvement, with many of its citizens needing to catch up on their retirement savings and worried about their financial future. As the world evolves, countries must evaluate and strengthen their retirement systems to ensure that all citizens enjoy a comfortable and secure retirement.
