(ConservativeInsider.org) – Many Americans are anxious about retirement and how much they have saved up, but a new report indicates it may not be their fault. According to the Mercer CFA Institute Global Pension Index, which was released last week, the retirement system in the United States gets a C+ grade, which puts the US on the same level as countries like Kazakhstan, Croatia, Colombia, Spain, and France. Countries like the Netherlands, Denmark, Israel, and Iceland received A grades from the Institute. The US is ranked 22 out of 47 countries on the report.
The grade of C+ on the report indicates that a retirement system has positive features but also “major risks or shortcomings” that must be addressed, otherwise “long-term sustainability can be questioned.”
The retirement system in the United States has two prongs: private pension plans such as 401(k)s and Social Security. However, approximately half of American workers do not have access to a retirement plan through their job, and Social Security only provides about 40% of an average worker’s income after they retire. This system has led to a society where many, if not most, seniors struggle financially.
Social Security in the United States is heading towards a crisis, as projections indicate that the funds will be depleted by 2033. In addition, since Social Security is funded by current workers in what is known as a “pay-as-you-go” arrangement, new solutions must be implemented as the birth rates are falling and the population is getting older.
Current suggestions for improving the system include raising the age of retirement or decreasing benefits for retirees, both of which are unpopular ideas. There were massive protests in France when they raised the age of retirement earlier this year, and with many seniors already struggling financially, decreasing benefits will make things even harder on them.
The report suggests that the US limit access to retirement funds before a certain age and improve retirement funds for lower-income people.
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