017 // US Retirement System Report Card

Sam dives into a Wall Street Journal article that discusses the findings of a study conducted by the Mercer CFA Institute on global retirement systems. The study assigns the US a grade of C+, indicating that Social Security and 401(k) plans leave Americans less secure than retirees in other parts of the world.

The study ranked 47 countries, with the US finishing in the middle at 22nd place. It considered factors such as benefits, government debt, demographics, and home ownership. Sam elaborates on how our retirement systems stack up against those of other nations and offers insights on major pitfalls to avoid as one approaches retirement.

Episode Highlights: 

[02:10] This episode is inspired by a Wall Street Journal article called The U.S. Gets a C+ in Retirement based on a study that ranked 47 countries on retirement. 

[04:16] They looked at the public sector and the private sector or Social Security and company sponsored retirement plans.

[04:32] Two to three decades ago the private sector mostly had pension plans or defined benefit plans. All of the responsibility for providing retirement fell on the employer and their plan.

[05:54] We've now seen a big shift into 401(k) plans or defined contribution plans. Employers often match. The burden has now shifted on to the individual.

[06:48] The public sector is largely Social Security.

[07:37] The US has shifted from defined benefit plans to defined contribution plans, whereas other countries haven't made that shift.

[08:25] In the US, the main way we're going to have retirement is from what we save. Social Security is a supplement. Some people may also have a pension plan.

[09:06] In other countries, a government pension is the main source of retirement.

[09:26] Pros of the US system include many great savings options and autonomy. The cons include the benefit of retirement falling upon us.

[11:22] When the responsibility falls on us we have more fear and more worry which can create panic and bad decisions.

[11:53] The antidote to fear and worry is having a financial plan that will give you some certainty.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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