World News for Students of English

02-09-2025 15:00

The US retirement system received a C+ grade in the Mercer CFA Institute 2024 Global Pension Index, behind countries such as the Netherlands and Australia.

Experts say the American system suffers from low participation, voluntary contributions, and frequent early withdrawals, known as 401(k) leakage. This weakens long-term savings and puts Social Security, already expected to face insolvency by 2033, under greater pressure. Americans often take money out early to pay for emergencies, houses, or health care, which reduces compound interest growth.

Other nations require mandatory contributions and higher retirement ages to adapt to people living longer. The Netherlands is praised for strong governance and compulsory contributions. By contrast, in the US, participation in retirement plans is voluntary, and many workers choose not to opt in.

Still, the US has some strengths: high average retirement incomes and Social Security’s progressive formula. Experts argue reforms like limiting leakage and boosting contributions could raise the country’s grade.

Difficult words: insolvency (not having enough money to pay debts), compound (when something grows by adding more to itself, for example, interest on money), opt in (to agree or join something by one’s own decision), formula (a set rule or system for calculation).

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