It is no secret that the United States’ retirement system is a little wonky. Some experts think that the country still has lots to learn and might suggest the US needs to take notes from countries like Norway, Great Britain, Australia and Israel.
Though, different retirement systems from across the border are kind of hard to compare, because they’re formed over a long period of time and are influenced by many different factors, such as political compromises, cultural norms and national institutions.
There has yet to be found a perfect system and there isn’t a country which can guarantee retirement security and fiscal soundness to its citizens yet. “One thing I can tell you, everyone complains about their own system,” pension policy senior fellow at the University of Minnesota, Twin Cities and founder of Navega Strategies, Kurt Winkelmann jokes.
But there are a couple of things the United States could look into to up their retirement game. According to Pew Research Center, there are way too many people who aren’t contribution retirement savings plans. They have calculated that over a third of private-sector workers don’t have access to employer-sponsored retirement savings plans and 31% of people who do have access don’t even participate at all. Despite all the education on retirement saving plans, there are many people who are still clueless about the matter and are still unaware of their Individual Retirement Account (IRA).
What the United States can learn from other countries is how to implement superannuation, a mandatory contribution to the retirement savings system. It means that a set percentage of someone’s income is put in by the employer and the employee can put in more if desired.
Also, with a system like that it is not beneficial to withdraw money from the account before the employee reaches the age of sixty. Santa Clara University finance professor Meir Statman, is convinced this system would be great for the United States as well:
“The retirement savings problem in the United States and many other countries is acute, and attempts to nudge non-savers toward voluntary defined-contribution savings have left many behind. Mandatory defined-contribution would constitute a second layer in a retirement savings pyramid, above a first layer of Social Security and below a third layer of voluntary savings,” Meir wrote.
Currently, it is not the government’s top priority to change the United States’ retirement regulations, but experts think it is of great importance that it becomes just that. With the aging population it’s wise to look into what works in other countries and see if it could be implemented in ours.