U.S. retirement system earns a C+ as experts warn flexibility can no longer be optional

Think the U.S. retirement income system ranks among the world’s best? Not quite. Among 55 retirement systems evaluated globally, the United States received a C+ — acceptable, but far from impressive.

More than two dozen countries finished ahead of the U.S. in the newly released 2026 Marsh CFA Institute Global Pension Index, which measures retirement income systems around the world.

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Still, every retirement system is grappling with the same broad problem: shifting demographics.

“Increasing longevity is too significant to ignore, with wide-ranging impacts on individuals, governments, economies and societies,” Pat Tomlinson, president and CEO of Marsh People and Investments, said in a release.

No matter how countries are ranked, they are all dealing with the same population changes. There is also no universal solution.

“The right approach for one country, one system, or even one individual will not be the right approach for another,” Tim Jenkins, lead author of the report and a partner at Marsh People and Investments, said in the release.

What all systems do need, the report argues, is the ability to adapt. That becomes especially important as more retirees continue earning money after leaving full-time work, whether through gig jobs, part-time roles or gradual retirement transitions.

“Retirement design must become more flexible — in when people access income, in how products are structured, and in how we think about the line between work and retirement,” he said. “That flexibility is no longer optional.”

How countries are ranked

Only six countries received an A, which the index describes as “a robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.”

The Netherlands took first place with a score of 85.8, followed by Denmark at 84.1 and Iceland at 84.0. Singapore, Israel and Australia also earned A grades.

The index notes that what works in one nation may not work in another because of different cultural, economic and political conditions. Even so, the highest-ranked systems share several traits, including broad coverage and funding models that are not entirely dependent on pay-as-you-go financing.

The index defines C+ as “a system that has some good features but also has major risks and/or shortcomings that should be addressed.” If those problems are left unresolved, the system’s “efficacy and/or long-term sustainability can be questioned.”

In the U.S., Social Security relies on pay-as-you-go financing, meaning current workers’ payroll taxes are used to pay benefits to people already retired.

But demographic changes mean there are not enough workers to support a growing retiree population, while people are also living longer.

In 2025, nearly one in five Americans — 18.9% — were 65 or older, according to the U.S. Census Bureau. By 2060, the agency projects that older adults will account for 23.4% of the U.S. population.

“Public pensions may cover more than 90% of the average wages in some countries (e.g., Brazil, Turkey, the Netherlands and Argentina), but only 50% of the average wage in others (e.g., the United States, Canada, India, New Zealand, Japan and South Africa),” according to the report.

That is why the 2026 Social Security Trustees’ Report projects the retirement trust fund will be exhausted in 2032. At that point, benefits would depend entirely on current workers, and payments would need to be cut by 22%.

“By the end of the century, the required cuts would grow to 38%,” the Trustees’ report says, unless lawmakers make changes to raise revenue or lower program costs.

Building your own nest egg

For savers, a C+ grade may raise concerns about what it could mean for retirement security.

The U.S. ranked 33rd out of 55 countries in the 2026 Marsh CFA Institute Global Pension Index, with a total score of 61.6, only slightly higher than 61.1 in 2025.

Social Security is not the only issue. The index also says the voluntary 401(k) and 403(b) model “leaves a significant chunk of the American population without any employer-sponsored retirement savings vehicle.”

Possible Social Security cuts, limited access to workplace retirement plans and a longer-living population all contributed to the U.S. scoring lower on the index’s sustainability measure.

There is little individuals can do about Social Security beyond advocating for changes, so personal savings will likely need to play a larger role. If you have access to a 401(k) or 403(b), it may be wise to contribute as much as possible each year, especially if your employer offers a match.

That strategy only works if you actually have access to such a plan. As the index notes, many American workers do not. In those cases, saving through an individual retirement account (IRA) or health savings account (HSA), both of which offer tax advantages, as well as brokerage accounts, may be more important.

Self-employed workers can also consider a Simplified Employee Pension plan, or SEP IRA, which allows contributions in both employee and employer capacities. A self-employed 401(k), also called a solo 401(k), works in a similar way.

Social Security was never intended to be the only source of retirement income, but many people may need to depend more heavily on their own savings to reach a comfortable retirement. With planning and discipline, however, it is still possible to aim for a strong retirement outcome.