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A new study of retirement systems around the world found that the U.S. system is under pressure. But, that doesn't mean that you can't still retire comfortably.
The newest Mercer CFA Institute's 2023 Global Pension Index, released Tuesday, rates retirement income systems across the world using the weighted average of the adequacy, sustainability and integrity of the systems. The U.S. earned a C+, with 63 out of 100 possible points and an overall ranking of 22 out of the 47 countries included in the study. The U.S. previously earned a C+ in the Institute's 2022 study.
Four countries — Netherlands, Iceland, Denmark and Israel — earned A's, the top-tier of the rating system. Australia, Finland and Singapore earned B+ grades and Germany and Canada, among others, earned B's.
The U.S. retirement system's C+ ranking puts it in the company of France, Spain, Colombia and Kazakhstan. The report states that these countries have "a system that has some good features but also has major risks," and warns that "without these improvements, [their] efficacy and/or long-term sustainability can be questioned."
Doubts about the future solvency of the US Social Security system are not new. The Social Security Administration stated in its 2023 Annual Report that it can pay the full amount of benefits as specified under current law until 2033 — but after that, something will have to change.
However, you can still save on your own to ensure a comfortable retirement. Here are some tips that will put you on the path to future prosperity.
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How to save more for retirement on your own
Saving for retirement on your own is a critical step to ensuring your future. There are several ways for Americans to save more for retirement, including:
- IRA contributions. Opening and contributing to an individual retirement account (IRA) can help you save for your retirement while enjoying certain tax advantages. For those looking for an IRA, we picked Charles Schwab's IRA as a top pick for its $0 minimum deposit for active investing and 24/7 customer support access. We also pickedFidelity Investments' IRA for having no commission fees for stock, ETF and options trades and no transaction fees on over 3,400 mutual funds.
Charles Schwab
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One®Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
Fees
Fees may vary depending on the investment vehicle selected. Schwab One®Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
Bonus
None
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One®Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
Educational resources
Extensive retirement planning tools
Terms apply.
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go®account, but minimum $10 balance according to the investment strategy chosen
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
Bonus
Find special offers here
Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other:Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Terms apply.
- Raise your 401(k) contributions. If your job offers a 401(k) plan as a benefit, it could be a helpful tool to save more for the future. And, it could be worth setting up your account so that it automatically increases your contributions by 1% each year, generally up to a 10% or 15% maximum.
- Save in an HSA. A health savings account can be used for retirement, and not just for healthcare expenses. While it requires a high-deductible healthcare plan to access, these plans offer tax-free growth and withdrawals for qualified expenses.
- Consider an annuity. Annuities can provide guaranteed lifetime income in retirement. In these contracts, insurance companies invest payments and eventually pay back the initial investment, plus interest and less the annuity's fees. However, annuities aren't the right option for everyone — make sure to fully understand the terms and information associated with a specific annuity before purchasing.
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Bottom line
The U.S. retirement system got a passing grade for a second year in a row. However, saving on your own is more essential than ever to retire comfortably — opening an IRA, automatically increasing your 401(k) contributions and considering other investment options can help you secure your future.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
