Americans Retire Later — and Get Fewer Benefits — Than Retirees in Other Countries

Most working people would probably agree that when it comes to retirement, the sooner — and cushier — the better.

But for most American retirees, that ideal simply doesn’t line up with reality — in large part, because our government structures don’t support it. Recent reporting by The Washington Post shows that the U.S. lags behind much of the rest of the world in terms of statutory retirement age and how far Social Security retirement benefits go in terms of income replacement. That’s despite the fact that our Social Security spending is, among the same collection of countries, about average.

To make matters worse, 2024’s Social Security Administration Trustees Report forecasts a sharp downturn in benefits beginning in 2033, as the trust fund supporting Social Security becomes (as has long been predicted) depleted.

Below, we’ll take a closer look at the data — and how to ensure you save enough to enjoy a well-deserved retirement, even amidst potential benefit cuts.

How American retirement benefits stack up — on the global stage

The official retirement age in the U.S. depends on your birthday. For those born between 1943 and 1954, it’s 66. There’s an incremental age increase for those born between 1955 and 1960, and those born after 1960 must wait until age 67 for full retirement benefits to be payable.

That’s compared to a worldwide median of 61, according to The Post’s calculation. (While you can begin taking your retirement benefits as early as 62, doing so lowers the amount you’ll receive — permanently.)

The study goes on to report, using OECD data, that Social Security benefits stand to replace only 39.1% of the average American’s paycheck. While close to the U.K’s 41.9% and Germany’s 43.9%, it’s below the OECD’s 50.7% average, as well as Mexico’s 55.5%, France’s 57.6% and Greece’s whopping 80.8%, among many others. (Note: The original data considered only the preretirement income of men, using 2022 figures.)

In spite of these lags, U.S. public pension spending is about average, globally, as calculated as a percentage of GDP. In fact, many countries whose pensions do a better job replacing preretirement income spend substantially less, by this measure, than the U.S. does — we spend 7.5% of our GDP, while the UK spends only 5.1%. Further, Iceland, where retirement benefits replace 43.1% of the average paycheck, pays just 2.9% of its GDP toward the service.

Many — including the Social Security office itself — point toward declining birth rates, as well as increasing life expectancy, as causes of the problem. Together, these two trends mean the average age of the U.S. population has increased, which means fewer young workers putting money into the system and more elderly retirees taking money out.

It’s also true, though, that the Social Security tax rate in the U.S. is substantially lower than similar taxes in many other countries. In the U.S., 12.4% of salaries are paid toward Social Security (by both workers and their employers). Compare that to the U.K’s 25.8% or Portugal’s 34.75%. (In Portugal, the government pension replaces 73.9% of the average man’s preretirement paycheck.)

How to get the most out of your retirement

There’s little the average American worker can do about upcoming Social Security cuts — though you can get a sense of how much Social Security you stand to receive based on your birthday and future retirement age using the SSA’s Benefits Calculator. (Of course, estimates are just that — and if your retirement date is far in the future, the trust fund may have been substantially depleted by the time you get there.)

What you can do, though, is wait as long as possible to begin taking Social Security. As mentioned above, starting your retirement early can lead to a permanent reduction in benefits — but deferring a few years past full retirement, to age 70, can permanently increase them.

You can also prioritize saving for retirement on your own terms. While Social Security benefits may be fixed (and dwindling), you have some agency in deciding how much you pay yourself now. Contributing to your employer-sponsored retirement plan, like a 401(k), is one of the best ways to grow your nest egg — especially if your employer offers a match.

Finally, find ways to make your retirement as cheap as possible — while also living richly. Finding the best Medicare plan, for example, can substantially reduce your health care related spending. Carefully consider Medicaid supplement plans, too, as well as Part D drug coverage for prescription medications.