The countries with the best retirement systems all share a single trait. In the U.S., you’re on your own — here’s how to copy their ‘architecture’

That works out to a grade of C+. Not exactly a stellar ranking for a country with such a sophisticated financial market. So what’s the disconnect?

The Index scores national retirement income systems across three pillars: adequacy (how much do you get?), sustainability (can the system keep delivering?) and integrity (can the system be trusted?).

In 2025, Netherlands topped the list with a score of 85.4, followed by Iceland (84) and Denmark (82.3).

How the U.S. retirement system is different

Of course, no single pension model fits all.

“Systems vary widely due to cultural, economic and political contexts, and what works in one country may not be easily replicated in another,” according to the report.

Still, Mercer and the CFA Institute found that “common features, such as inclusive access, robust governance and a minimum safety net pension, are consistently associated with stronger outcomes.”

The U.S. retirement system includes Social Security — with benefits based on lifetime earnings, adjusted to a current-dollar basis — along with voluntary workplace savings plans. These days, few private-sector companies offer a traditional pension.

Social Security, which provides retirement benefits for 63 million Americans, is a guaranteed income stream, but it was never designed to be a retiree’s sole source of income. Rather, it was meant to supplement personal savings and pensions.

However, most employers have moved toward defined-contribution plans like 401(k)s. That puts the onus on workers to save (and choose how much to save) — more like a DIY pension.

Plus, millions of Americans don’t have an employer-sponsored plan, particularly part-timers and gig workers (or those who are otherwise precariously employed).

The population is aging, while the birth rate is declining. And without reform, the Social Security retirement trust fund is projected to run out in 2032, which could lead to benefit cuts.

Retirees are already faced with inflation and rising costs. The average monthly Social Security check is $2,071, as of January. For most retirees, that’s not a lot to live on.

It’s not like that in all countries. What the Dutch, Icelandic and Danish systems do differently is automatically convert lifetime savings into lifetime income.

Iceland, for example, offers a basic income-tested Social Security pension, mandatory occupational private pensions that include contributions from both employers and employees and voluntary personal pensions that include contributions from both employers and employees.

How to create your own guaranteed income

So, while the “401(k) and IRA are excellent engines for accumulating wealth in the markets,” the U.S. falls short in other areas, says Jan Gleisner, president of Hafnia Financial, a California-registered investment advisor, in a release.

“There is no built-in, near-universal layer that turns those savings into lifetime income,” he says. “Social Security is the only piece that does that for everyone, and it was never designed to be a retiree’s entire income floor — only a foundation beneath it.”

Gleisner says the top countries in the Index don’t make their citizens “choose between the upside of the market and the security of income that doesn’t run out.” Instead, they get the benefits of both.

Americans have to do that for themselves.

On average, Americans expect they’ll need $1.46 million to retire comfortably, according to Northwestern Mutual’s 2026 planning and progress study. And almost half (46%) don’t expect to be financially prepared for retirement.

So, short of a major policy shift at a federal level, how can you “copy” the architecture of the top nations’ retirement strategies?

Gleisner says it requires building two layers: a dependable lifetime income for essentials and invested growth for everything else.