Why the Social Security crisis may leave American retirees worse off than in developing nations

Social Security crisis: As American retirees face rising living costs, a new analysis highlights a stark reality that the average Social Security beneficiary in the US could soon receive a smaller pension than retirees in countries many consider poorer.

US Average Social Security Benefits Lag Behind Many Countries

Payroll company Moorepay analysed state pension legislation and local cost-of-living figures to compare retirement incomes around the world in 2025. The findings are striking. Currently, the average US Social Security benefit is about $23,500 per year, covering 162.5% of basic living costs. While this leaves some cushion, it already puts US retirees behind counterparts in more than a dozen developed nations, including Italy, Germany, and most of Scandinavia.

Retirees in Poorer Countries May Have More Purchasing Power

The comparison becomes even more concerning when looking globally. Moorepay’s data shows retirees in countries like Ecuador, Colombia, Jordan, and Poland enjoy higher purchasing power relative to local living costs than many Americans. US retirees are also barely ahead of pensioners in Greece, Turkey, Estonia, and Montenegro.


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Social Security Cuts Could Hit Retirees by 2034

The situation is set to worsen. According to the Social Security Administration, under current law, all benefits are scheduled to be cut by 19% in 2034 when the Social Security trust funds are expected to run out of money, as per a MarketWatch report.

How Decades of US Budget Deficits Worsened the Crisis

The roots of the crisis stretch back decades. In 2000, the federal government ran a surplus of 2.3% of GDP, creating the capacity to fund Social Security long-term. But a combination of tax cuts, massive deficits during the 2008 financial crisis, and pandemic-era spending have left the federal budget deeply strained, as per the MarketWatch report. Today, deficits exceed 6% of GDP, and the national debt has more than tripled, nearing post-World War II record levels.

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Countries Offering Pensions That Exceed Living Costs

When compared internationally, the US is no longer a leader in retirement security. Moorepay’s analysis converts pensions into “international dollars” to reflect true purchasing power, showing the UK ranks 28th, with an annual pension equivalent to $17,607.35 worth of goods in the US. Italy’s pension, by contrast, converts to $36,606.49, and Kuwait tops the global list at $85,831.58.

Nations Where Retirees Struggle the Most Financially

While the UK and some other countries maintain pensions that exceed local living costs, giving retirees a surplus, many nations still leave seniors struggling. Jamaica, for instance, covers just 13.44% of living costs, leaving retirees £7,062.25 short each year, even after recent increases. Nepal’s state pension covers only 7.84% of costs, reflecting persistent socio-economic challenges.

FAQs

Will my Social Security cover my living costs in retirement?
Currently, the average benefit covers about 162.5% of basic living costs, but this may decline sharply by 2034.

How does the US pension compare to other countries?
Many retirees in Europe, South America, and the Middle East may enjoy higher purchasing power than U.S. retirees.