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The sustainability of the U.S. system is at risk due to a rise in government debt and a fall in the household savings rate. The system requires further reform to withstand the pressures of its aging population and help Americans secure sufficient retirement savings. According to the Index, many retirement systems are under great stress, and even the most advanced retirement income systems need reform. The ranking is based on three factors: the adequacy of the retirement income system to replace preretirement income, the sustainability of that system and its integrity. “Too few Americans are accumulating sufficient assets in their defined contribution 401(k) plans,” said Arthur Noonan, senior consultant in Mercer’s Retirement, Risk and Finance group. “Not only are the savings levels inadequate to provide for a sustainable retirement income, but regulations allow participants to borrow against their 401(k) assets, make withdrawals—albeit with penalties—or take a lump sum upon retirement, which can easily be spent, leaving them nothing for their later years.” “Many of the world’s retirement systems are under increasing stress with an aging population, low investment returns and, in some cases, significant government debt,” said Mercer Senior Partner and author of the report Dr. David Knox. “There is no single answer to the best asset allocation for every country. However, a diverse group of assets across the system is likely to provide a better outcome than heavy concentration in bonds or equities.”
The sustainability of the U.S. system is at risk due to a rise in government debt and a fall in the household savings rate. The system requires further reform to withstand the pressures of its aging population and help Americans secure sufficient retirement savings.
According to the Index, many retirement systems are under great stress, and even the most advanced retirement income systems need reform. The ranking is based on three factors: the adequacy of the retirement income system to replace preretirement income, the sustainability of that system and its integrity.
“Too few Americans are accumulating sufficient assets in their defined contribution 401(k) plans,” said Arthur Noonan, senior consultant in Mercer’s Retirement, Risk and Finance group. “Not only are the savings levels inadequate to provide for a sustainable retirement income, but regulations allow participants to borrow against their 401(k) assets, make withdrawals—albeit with penalties—or take a lump sum upon retirement, which can easily be spent, leaving them nothing for their later years.”
“Many of the world’s retirement systems are under increasing stress with an aging population, low investment returns and, in some cases, significant government debt,” said Mercer Senior Partner and author of the report Dr. David Knox. “There is no single answer to the best asset allocation for every country. However, a diverse group of assets across the system is likely to provide a better outcome than heavy concentration in bonds or equities.”