Why America's Retirement Scorecard Keeps Falling Short: The Planning Gap Explained

The 2025 Global Retirement Index delivered sobering news for millions of Americans: the United States ranks 21st out of 44 countries when it comes to retirement preparedness and citizens’ confidence in the system. For anyone banking on a secure retirement, this positioning raises uncomfortable questions about what’s actually broken—and whether the problem lies with policy, personal decisions, or both.

The Size Disadvantage: Why Smaller Nations Outpace America

At first glance, America’s ranking might seem shocking for the world’s largest economy. But experts point to a structural reality: larger nations consistently trail their smaller counterparts in retirement confidence metrics. According to analysis from major financial institutions, smaller countries simply find it easier to implement cohesive social programs that generate public confidence.

“Smaller economies have fewer variables to manage,” explains one analyst perspective. Citizens in these nations experience less anxiety about income inequality, reduced concerns over benefit erosion, and greater faith in inflation protections. They’re less exposed to market volatility and public debt pressures. Essentially, systems that are easier to understand and navigate naturally produce higher confidence levels—a luxury larger, more complex economies struggle to offer.

The Real Problem: Americans Aren’t Preparing (And Many Don’t Realize It)

Here’s where the uncomfortable truth emerges: the retirement index measures how secure people feel, not their actual financial position. That distinction matters enormously.

Derek Carlson, a retirement planning expert, points to a critical failure: “The overwhelming majority of Americans haven’t adequately prepared for retirement. They’re overly reliant on government benefits—Social Security, Medicare—as if these were meant to be complete income replacements. They weren’t. They’re safety nets, period.”

This dependency reflects a generational shift. Sixty years ago, employer-provided pensions were standard. Retirees didn’t need personal financial literacy because corporations handled the planning. That safety net is essentially gone, yet many Americans haven’t adjusted their mentality or their behavior accordingly.

Financial Literacy: The Missing Piece in America’s Retirement Cards

The data is stark: 64% of Americans report inadequate retirement preparation. The root cause repeatedly circles back to one factor—insufficient financial education. Most Americans never learned how to build retirement security independently because they never had to.

“The K-12 education system simply doesn’t teach financial literacy,” Carlson emphasizes. “If curricula included personal finance, investment basics, and retirement planning fundamentals, future generations wouldn’t find themselves in this position.”

The solution sounds deceptively simple: teach people early to contribute consistently to retirement accounts, invest regularly in assets that hedge against inflation (real estate, stocks, precious metals), and view retirement as a decades-long planning process rather than something to figure out at 65.

Realistic Options for Those Nearing Retirement Now

For Americans within 10-15 years of retirement, the landscape looks different. Relocating abroad—to Portugal, Mexico, or similar countries—can mathematically extend retirement savings. Lower cost-of-living regions make money stretch further.

But relocation carries hidden costs: distance from family, loss of familiar infrastructure, cultural adjustment. For most, the pragmatic approach involves redesigning retirement at home. This means downsizing housing, potentially relocating to lower-cost states, working longer (by choice), or embracing community-based living arrangements that reduce individual expenses.

The through-line from every expert remains consistent: “America has the infrastructure and opportunity to support dignified retirement. The gap isn’t systematic—it’s preparational. Those who plan methodically, educate themselves, and start early can absolutely achieve security.”

The 2025 rankings, while disappointing, might serve as a wake-up call rather than a verdict on America’s retirement system itself.