When it comes to retirement in the U.S., Social Security tends to be the backbone for most people. It’s steady, familiar, and for many Americans, the main thing keeping retirement even remotely within reach. But how does it compare to what other retirees are getting around the world?
Spoiler: the U.S. doesn’t top the list. In fact, it doesn’t even crack the top 10.
This is a closer look at how America’s retirement system stacks up—and what that means for your future plans.
Social Security Replaces Less Income Than Global Peers
As per the Organisation for Economic Co-operation and Development (OECD), Social Security in the United States replaces about 40% of a typical worker’s pre-retirement income. That’s well below the OECD average of 58%.
This means American retirees generally get back less of what they earned, compared to retirees in other developed nations. And here’s where things get even more eye-opening.
U.S. workers contribute about 21.9% of their income to Social Security—more than the OECD average of 16.6%. In other words, Americans pay a higher percentage of their income into the system but end up with smaller benefits.
That translates into relying more on personal savings, 401(k)s, and working later in life to make ends meet.
Retirement Age Keeps Creeping Up
Many countries let workers step away from their jobs earlier while still receiving pensions that cover the basics—and then some. That’s not quite how it plays out in America.
Here, retiring ahead of schedule often means taking a noticeable hit to your monthly check. And those cuts aren’t small enough to ignore.
Because of that, the average retirement age in America now sits at 65.2 years for men and 65.3 years for women, placing it among the highest in the developed world. That puts a lot of folks in a bind: either they’ll have to keep working longer than planned or retire, or they’ll need to make do with less.
Globally, America Trails In Pension Rankings
The 2023 Mercer CFA Global Pension Index ranked the U.S. 29th out of 47 countries, with a C+ grade. Countries like the Netherlands, Denmark, and Israel dominated the top ranks.
Based on these comparisons, the U.S. pension system provides smaller benefits while other countries have systems that offer stronger, more dependable support for their retirees. The U.S. lags behind largely due to lower scores in adequacy, sustainability, and integrity—clear signs that the system needs serious attention and reform.
Who Leads The Pack?
Need an example of what “better” looks like?
In the Netherlands, retirees receive more than 90% of the average worker’s income in pension benefits.
Then enters Denmark’s dual-system model.
Denmark offers a two-tiered pension model that includes a universal basic pension and a means-tested top-up, which covers at least 40% of average earnings. Healthcare and housing assistance are also part of the system.
Such layered approaches provide stability while adjusting to each person’s financial needs. It creates a safety net that feels less like a tightrope and more like a trampoline.
Lifetime Payouts: Another Area Where the US Falls Short
Did you know that the average U.S. retiree receives lifetime payouts equal to 7.4 times their final working-year income, compared to an OECD average of 10.1 times? And this is supported by an analysis by 24/7 Wall St.
This means that over the course of retirement, Americans receive significantly less.
What You Should Take Away From All This
Compared to many countries, the U.S. offers less income support in retirement, despite asking workers to contribute more and stay in the workforce longer.
So what can you do with this information? Two things:
- Plan proactively. Social Security is a base—but it’s not likely to be enough.
- Learn from abroad. Systems in Denmark, the Netherlands, and others demonstrate that it’s possible to provide more support without increasing the workload for workers.
Retirement shouldn’t feel like a gamble. The better informed you are now, the more freedom you’ll have later. Keep an eye on global models—they may just inspire smarter choices for your own future.
