‘Flexibility is no longer optional’: The US retirement system gets a C+ grade — and its risks are ‘too significant to ignore’

But all retirement income systems face the same challenge: changing 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.

All countries face these demographic shifts, regardless of how they’re ranked in the study. And there’s no one-size-fits-all fix.

“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.

But there is something that all systems share: the need to adapt. That’s especially the case as more retirees continue to earn income — either through gig work or part-time employment — after “retiring.” Or they take a more phased approach to retirement.

“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 earned an A, which the index defines as “a robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.”

The Netherlands came out on top, scoring 85.8, followed by Denmark (84.1) and Iceland (84.0). Singapore, Israel and Australia also earned A grades.

While the index acknowledges that what works in one country may not work in another — due to different cultural, economic and political contexts — the highest-ranking countries do share some common features, such as near-universal coverage and funding structures that aren’t solely reliant 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.” And, if those shortcomings aren’t addressed, the system’s “efficacy and/or long-term sustainability can be questioned.”

For example, the Social Security retirement income system in the U.S. relies on pay-as-you-go financing, which means the taxes that workers pay now are being used to fund the monthly benefits of Americans who are currently retired.

But, thanks to demographic shifts, there aren’t enough workers to support the growing number of retirees, who are also living longer.

In 2025, almost one in five Americans (18.9%) were 65 or older, according to a report by the U.S. Census Bureau. And, by 2060, it projects that older adults will make up 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’s why the 2026 Social Security Trustees’ Report projects that the Social Security retirement trust fund will run out in 2032, which means benefits would rely entirely on current workers — and would reduce benefit payments by 22%.

But, “by the end of the century, the required cuts would grow to 38%,” according to the Trustees’ report. That is, unless policy changes are made to increase revenues or reduce program costs.

Building your own nest egg

In the meantime, if you’re saving for retirement, you might be worried about how a C+ grade will impact your future nest egg.

Overall, the U.S. ranked 33 out of 55 countries, with a total score of 61.6 (up ever so slightly from its score of 61.1 in 2025) in the 2026 Marsh CFA Institute Global Pension Index.

Pay-as-you-go Social Security isn’t the only issue. There’s another reason the U.S. gets a lower grade: the voluntary 401(k) and 403(b) system “leaves a significant chunk of the American population without any employer-sponsored retirement savings vehicle,” according to the index.