These countries have the most generous retirement plans in the world
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Portugalranked at the top for the most financially adequate retirementsystem according to a new study.
- The US, however, ranked 24th in adequacy among the 47 countries studied for its retirement system.
The latest Mercer CFA Institute Global Pension Index, released Tuesday, ranked Portugal and Netherlands at the top for overall retirement systems, followed by the Iceland and Denmark. The ranking of 47 retirement income systems took into account measures of adequacy, sustainability, and integrity.
The adequacy rating — which makes up 40% of the overall index — accounts for benefits, system design, savings, government support, home ownership, and growth assets. The following chart shows the scores for that sub-index on a scale from 0–100 for the top 25 countries.
The US came in at 22nd on the overall ranking, scoring a C+. A C+ on the scale represents "A system that has some good features but also has major risks and/or shortcomings that should be addressed; without these improvements, its efficacy and/or long-term sustainability can be questioned."
Many Americans have been skeptical of the US's retirement system, funded primarily through savings in 401(k)s and individual retirement accounts, as well as Social Security. While this benefits white-collar workers, blue-collar workers and gig workers often struggle to save up enough for retirement. Many Americans lack access to a 401(k), and not all employers provide retirement plans.
Americans on the whole feel they're behind on retirement and may be forced to push it back amid financial concerns. A recent Bankrate survey shows 56% of Americans feel behind on saving for retirement, while around a quarter say they haven't made retirement contributions in at least a year.
Portugal, which ranked at the top of Mercer's list, also ranked second for comfortable retirement on U.S. News & World Report's Best Countries ranking.
The retirement age in Portugal is 66 years and seven months, which is set to drop by three months this year. Data from Numbeo found that Portugal's cost of living, excluding rent, is 29% lower than the US. Portugal's healthcare system is considered top notch, and it also has golden visas that can be obtained by purchasing 500,000 euros worth of real estate or investing 500,000 euros in scientific research.
The Netherlands, meanwhile, requires all workers to have a private and public pension account. The state pension is paid starting at age 66, Though prices in the Netherlands are about 10% higher than the US, excluding rent, the country has universal healthcare, and its pension structure may "continue to provide very good benefits, supported by a strong asset base and very sound regulation," the report found.
Iceland, which ranked third for adequacy — and second overall — has both a basic state pension and a pension supplement, with a retirement age of 67. Iceland provides universal healthcare to its residents, and rent is relatively inexpensive, according to SmartAsset.
Correction: October 19, 2023 — An earlier version of this article mislabeled the second-best overall country on the ranking.
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