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22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night

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As the first of the 80 million Baby Boomers have begun to retire, it has become increasingly apparent that the United States is facing a pension crisis of unprecedented magnitude.  State and local government pension plans are woefully underfunded, dozens of large corporate pension plans either have collapsed or are on the verge of collapsing, Social Security is a complete and total financial disaster and about half of all Americans essentially have nothing saved up for retirement.  So yes, to say that we are facing a retirement crisis would be a tremendous understatement.  There is simply no way that we can keep all of the financial promises that we have made to the Baby Boomer generation.  Unfortunately, the crumbling U.S. economy simply cannot support the comfortable retirement of tens of millions of elderly Americans any longer.  The truth is that we are all going to have to start fundamentally changing the way that we think about our golden years.

Once upon a time, you could count on getting a big, fat pension if you put 30 years into a job.  But now pension plans everywhere are failing.  State and local governments are cutting back and are raising retirement ages.  A majority of Americans have even lost faith in the Social Security system, which was supposed to be the most secure of them all.

The reality is that we are moving into a time when there is not going to be such a thing as “financial security” as we have known it in the past.  Things have fundamentally changed, and we are all going to have to struggle to stay above water in the economic nightmare that is coming.

Part of the reason we have such a gigantic economic mess on the way is because we have promised vastly more than we can deliver to future retirees.  When you closely examine the numbers, it quickly becomes clear that a financial tsunami is about to hit us that is going to be so devastating that it will change everything that we know about retirement. 

The following are 22 statistics about America’s coming pension crisis that will make you lose sleep at night…. 

Private Pension Plans And Retirement Funds

1 – One recent study found that America’s 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008.

2 – Approximately half of all workers in the United States have less than $2000 saved up for retirement.

3 – According to one recent survey, 36 percent of Americans say that they don’t contribute anything at all to retirement savings.

4 – The Pension Benefit Guaranty Corporation says that the number of pensions at risk inside failing companies more than tripled during the recession.

5 – According to another recent survey, 24% of U.S. workers admit that they have postponed their planned retirement age at least once during the past year.

State And Local Government Pensions

6– Pension consultant Girard Miller recently told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities.  When you break that down, it comes to $22,000 for every single working adult in California.

7 – According to a recent report from Stanford University, California’s three biggest pension funds are as much as $500 billion short of meeting future retiree benefit obligations.

8 – In New Jersey, the governor has proposed not making the state’s entire $3 billion contribution to its pension funds because of the state’s $11 billion budget deficit.

9 – It has been reported that the $33.7 billion Illinois Teachers Retirement System is 61% underfunded and is on the verge of total collapse.

10 – The state of Illinois recently raised its retirement age to 67 and capped the salary on which public pensions are figured.

11 – The state of Virginia is requiring employees to pay into the state pension fund for the first time ever.

12 – In New York City, annual pension contributions have increased sixfold in the past decade alone and are now so large that they would be able to finance entire new police and fire departments.

13– Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the combined pension liability for all 50 U.S. states.  What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds.  That is a difference of 3.2 trillion dollars.

Social Security

14 – According to one recently conducted poll, 6 out of every 10 non-retirees in the United States believe that the Social Security system will not be able to pay them benefits when they stop working.

15 – A very large percentage of the federal budget is made up of entitlement programs such as Social Security and Medicare that cannot be reduced without a change in the law.  Approximately 57 percent of Barack Obama’s 3.8 trillion dollar budget for 2011 consists of direct payments to individual Americans or is money that is spent on their behalf.

1635% of Americans over the age of 65 rely almost entirely on Social Security payments alone.

17 – According to the Congressional Budget Office, the Social Security system will pay out more in benefits than it receives in payroll taxes in 2010.  That was not supposed to happen until at least 2016.  The Social Security deficits are projected to get increasingly worse in the years ahead. 

18 – 56 percent of current retirees believe that the U.S. government will eventually cut their Social Security benefits.

19 – In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers.  In 2010, each retiree’s Social Security benefit is paid for by approximately 3.3 U.S. workers.  By 2025, it is projected that there will be approximately two U.S. workers for each retiree.

20 – The shortfall in entitlement programs in the years ahead is mind blowing.  The present value of projected scheduled benefits surpasses earmarked revenues for entitlement programs such as Social Security and Medicare by about 46 trillion dollars over the next 75 years. 

21According to a recent U.S. government report, soaring interest costs on the U.S. national debt plus rapidly escalating spending on entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every single dollar of federal revenue by the year 2019.  That is before a single dollar is spent on anything else.

22 – Right now, interest on the U.S. national debt and spending on entitlement programs like Social Security and Medicare is somewhere in the neighborhood of 15 percent of GDP.  By 2080, those combined expenditures are projected to eat up approximately 50 percent of GDP.

  • whoisbiggles

    Good old Otto Bismarck, trust a Germany to get us all into this terrible mess.

    To be fair though the old codger did finance his Old Age Pension program, with a tax on workers, this provided a pension annuity for workers who reached the age of 65 years. At the time, the life expectancy for the average Prussian was 45 years. Very astute collect tax for a benefit you will hardly ever be required to pay.

    Seems you have quite a few opportunities open to resolve this problem:

    1. Increase the social security eligibility start date to 85years.
    2. Open the borders let anyone who wants to come and work in America do so, hopefully you’ll get enough new workers to stave off the collapse of this giant Ponzi scheme for another generation.
    3. Underfunded and unfunded retirement schemes should either be fully funded or the entitlements reduced to what the actual about of money held is.
    4. Print more money.

    I wonder which way the Fed will go?

  • TnAndy

    Retirement is a relatively recent social experiment….maybe 100 years or so old. Before that, except for the really rich, older folks lived with their children ( ala “The Waltons” )and performed as much work as they could to help support the household until they simply couldn’t physically do it anymore.

    My wife’s ( born mid 50’s ) father was mid 70’s when she was born, last of 5 kids, his second marriage. He owned his own business, and walked to work ( and home for lunch )every day until just before his death at 86. ( Mid 1960’s )

    We’re going back to that type of lifestyle. Multiple generations in one household, folks working/producing until they die. That just how it will be.

    We can’t afford “retirement” for the masses, because it was based to the theory of unlimited future growth…both for investments, and for a population that could be taxed to support Grandpa & Grandma living easy in Florida/etc, hitting the golf course every day. Turns out, the theory was wrong.

    Best thing you can do to prepare for retirement is sock away some precious metals, and build a lifestyle based on self sufficient living…..and be pleasantly surprised if you get much from a pension or social insecurity.

  • Joe in JT

    I never thought of getting high on perscription pills until reading this depressing article.

  • The faults are not on the baby boomers or their parents. We are in this situation now because of the baby crunch that followed the invention of contraception in the 60s – just look at the age pyramid ( and you will see an inversion of the trend at this date. Now compare this pyramid with that of a country where contraception is forbidden (try Philippines or Afganistan on the above link) and you will see where the problem lies.

    Some of our fathers were told that having few children was a path to richer lifestyle, now governments have to face the fact that what they did might not have been right. There is unfortunately few ways to really fix the problem, as in the end taking care of the elders required manpower and care, and there are just not enough people around to do it.

    One IMPORTANT thing to consider though, is that our elders lives are not worthless. Indeed, they carry the knowledge from the past and have lots to tell about life in general. See for an example

  • Karen W Poore

    So okay Americans’ that built this country and the major corporations that have since deserted us for cheap labor in other countries are going to be living in the streets?!
    Will we have a social revolution any time soon when they just shoot us down?
    So much for the Golden Years …
    How can we get rid of these people whose whole life is consumed with Money, Power and Greed? These people are ruining our lives, lives of people that just want to live a simple life.
    How can we wake up the population to their ways and help them realize the true evils of money and possession?

  • TheDude

    So what is the best course of action to protect one’s future now that we can’t count on our retirement plans. 401Ks/IRAs could go bust if the market collapses, and social security ain’t gonna be there. What is the new way?

  • Michael A R

    These forcasts, dire as they are, are based on an average GDP growth of 3%. Should we go into a double-dip or an all out collapse they will be meaningless. It wont matter how many dollars one has saved for retirement or anything else as there will be no dollar. In that case “money” in the bank will be worthless. Open your own bank, buy G & S.

  • SAM

    STart Taxing ALCOHOL the way it should be….PERIOD and all the FAT CATS with Big Yachts,Cars,Homes,And Take SS away from all the MILLIONAIRES

  • D

    This article really captures the “House of Cards” mood nowadays. If someone keeps threating that “I’m gonna punch You someday” after a while, you just want to get the punch overwith. That’s a terrible view to have on the country, yet you talk to people and there’s this “weight” on everyone. It’s almost like the economic problems building and building, are just as maddening as the troubles that will eventually “punch”.
    Well that’s just my take in all of this.
    Thanks for your time.

  • Grumpy

    Since I have no publicly-funded pension, the only loss of sleep will be due to the additional bonds issued and taxes levied to prop up these “legal” Ponzi schemes.

    What you’re really saying is that I will be forced to pay more money into a system whose employees (including uneducated janitorial staff) make a higher annual salary (paid by taxed/borrowed money) than I and many other private sector employees do so they can keep their jobs and cushy retirement pay – at my expense?

    Not on my dime, amigo. I have no dimes left for them to steal anyway.

  • Ritou

    Wish we could have the same statistics about about each European country.

    Those government useless employees and the even useless politicians : where will they get the financing for all the fat pensions they voted for themselves ??

  • Something Wicked This Way Comes

    It defies gravity- for now.

    Imagine how it used to be. We bought stock in a company hoping to sell it to the next sap for even more money than we paid for it. And it worked. Like buying houses.

    It’s a great scam, until we run out of saps or money. Clearly we have plenty of saps, but interestingly enough…it’s money we may run out of. You see, you can’t keep printing money forever. Money now is like a two dollar stock that splits 2-1 every month. After a few years you wind up with a bazillion shares, but each has no value.

    Our dollar is essentially in the same boat. We have in theory, a bazillion dollars thanks to the Fed but nobody has really caught on that they don’t actually exist (as debt only) and if they did that they have no real value anyway…and the reason that this is…is because all of the saps are fully invested in the myth that they do. They have to be. Everyone’s economic survival relies on that belief. Your retirement, your equity in anything, must rely on the myth that a dollar is worth something in the future. But if your government owes 13 trillion dollars in debt, guaranteed debt, how are you going to pay that back? Do you tax people to death, or print even more worthless money? How do we pay this debt off?

    You can’t. This game ends when people figure that out. Government really has killed it’s golden goose. But fortunately the goose (the saps) haven’t figured that out yet. And I pray that it takes the saps another 30 years of bond interest payments while the principal and interest continue to rise- to figure out that we cannot pay our debt. No amount of taxing, no amount of money printing, there are no tricks left. The only thing standing between us and economic collapse is that we have all these saps still running around believing that we can miraculously pay our debt off or at best, refinance this debt forever to stave off the inevitable.

    Buying worthless paper, with worthless paper. The last great bastion of wealth in this country, 13 trillion dollars worth- is invested in 401ks and the stock market. By individuals and corporations. The government knows this. They are going to try and steal this from you. Not because they want to…but because they HAVE to. There is no other source of wealth to service that enormous debt load. That is why they are encouraging people to buy US bonds, that is why they penalize you a total and minimum of at least 30% if you cash your 401k out. (tax and penalty) That is why the Bush tax cuts will expire and those cuts apply to every wage bracket- not just the wealthy. That’s you. They are coming for your dough.

    Remember when Obama uttered the campaign promise that people would be allowed to raid their 401ks without penalty? Why do you think that has never materialized? Think that was an oversight, a forgotten promise? Think again.

    Hide your money under a mattress. Bury it in the back yard. Find a country which is solvent, has their own currency, and is debt free to invest in. But whatever you do, do not invest here. The government needs you to be a sap. It needs your money. It will do everything in its power to get it’s hands on your money to stave off economic collapse. It needs you to be a sap.

    A few years ago, we had make believe equity in homes. That same make believe equity exists in the stock market. Don’t be a sap.

  • sharonsj

    Unless you are a government worker, with a guaranteed pension and salary, you live from paycheck to paycheck. It’s going to get ugly as more poor Americans are called upon to make sure the union workers live very well while the rest of us are in the toilet. And this from someone who supports unions!

    I had saved up $10,000 for retirement (apparently this is the average amount about 50% of Americans have saved). But that money got used up quickly when I developed medical problems. I think 60% of bankruptcies are because of medical bills, so perhaps Obamacare might ameliorate that–but who knows?

    We are circling the drain and I see no solutions. We have a corrupt, stupid, inept and partisan Congress. We have two wars and billions for war profiteers and dictatorial regimes. And what do the politicians want? More money for the rich and a cut in food stamps for the poor. If you think things are bad now, just wait; I’ve seen too many posters asking for a Castro or Che to save us–making the Tea partiers head explode.

  • Something Wicked This Way Comes
  • Not so Mad Max

    I’m not quite sure what to say about this, saving used to be SOP for Americans. Social Security has been abused and turned into something it was never suppose to be. Unions have failed their members by mismanaging their pensions. Most people are still deep in debt and don’t want to make the sacrifices to get out and grasp control of their lives. States have been cowards in agreeing to gold plated pension plans they knew would come back to haunt them.
    You know what’s the saddest thing, time is running out, most people are oblivious to what’s happening and there are those who will say higher taxes will fix the problem. High taxes have not saved Europe and it will not save us.

  • Valhalla

    We have lived like drunken fools and now we have to pay for it.

  • El Pollo de Oro

    Many of us who are self-employed in The Banana Republic of America (formerly the USA) have what is known as a SEP IRA. A SEP is self-directed, meaning you get to fund it yourself (and it grows tax-deferred). If you’re worried about the future of social security, a SEP is one option for the self-employed. But in this economic meltdown, there are things to consider:

    1. If business is down and profits are down, you can’t contribute as much annually to your SEP.
    2. Because interest rates are so pathetically low, SEPs aren’t providing as much nest egg as they did in the past.
    3. The health care reform bill that passed in 2010 doesn’t go nearly as far as it should have. Robber barons like Blue Cross, Aetna and United still have small businesses by the balls–and if you get sick and the corporate bastards who run your health insurance plan decide to screw you (always a possibility), the nest egg in your SEP could vanish overnight.
    4. Think twice about getting married because during a divorce, one of the things a golddigger can legally steal is your IRA (SEP or otherwise). Beware.

    Running a small business in the BRA is not easy. You pay a fortune for crappy health insurance, you have to fund your own retirement, and you don’t get bailouts or corporate welfare from the taxpayers. But job security with generous employer-funded pensions is a thing of the past in the BRA–so being self-employed, for all its hardships, has its advantages. The thing is that you have to be able to STAY in business if you want to fund your retirement account–and that’s a tall order when your country has un-developed and turned into a Third World horror movie.

    Bienvenido a La República Banana de América, donde los vivos tendrán celos de los muertos.

  • Chuck

    The pension concerns are most critical.
    However, when you state that 35% of Americans over 65 rely “almost entirely” on Social Security, it sounds deceptive. What do you mean by “almost”? And how many of those rely entirely on Social Security?
    Likeiwise, projections that extrapolate figures 75 years into the future, or include “2080” as an estimable year of reference are dubious at best. It being 2010, most people working today will likely not be alive(about a 80% chance anyway) in 2080 anyway.
    I appreciate the point, and the concern, but it is much more impactful–and beneficial to your argument–to make projections based on years that are not so far ahead. For example, do you think FDR could have convinced representatives to support a New Deal measure in 1933 because figures predicted that by 1990(in 57 years) unemployment losses and GDP could reach such-and-such a figure?
    What needs to be done right now to effect events next year?

  • jamie

    You betta go over and have a look at this guys FREE report. He called the crash in 2008 and now look what he says is coming.


  • anonymous

    Payback’s a bitch. All the arrogance and stupidity from previous decades of that generation’s greed is coming back to haunt them, how appropriate.

    Maybe the question of what is sustainable and truely robust will become more topical now?..

  • Lone Wolf

    If the criminals had not used the SS money to make the Deficit look smaller, had they not used it to finance wars; in other words, had the money been invested and left alone, the money would be there, in spades and there would be no problem.
    As for public pensions; there should not even be such a thing. A bureaucrat should not be paid twice as much as the private sector, and absolutely should not have a pension!
    They should be treated like the private sector with the ‘tough cookies, we are out of money. Go fish.’ That is basically what they tell us when they lay us off.

  • lostinmissouri

    Gov pensions are toast. SS is toast. The entire government debt has to go away, before this country can recover and work again.

    So, it is either print, print, print, till our dollar has been Zimbabwe-ed away, or total default announced to the world, by our Fed, State, and Local governments, which is, just another way to the same place.

    Either way, our dollar is toast and so are everyones savings, and standard of living.

    Hyper inflation is a given. I just wish I owed more money. Debts will be inflated away and everyone expecting monthly SS and pensions will see them shrink in purchasing power to about the price of a BigMac. imho

  • Tom

    Who do you think will win American Idol this season?

  • tom

    ” Social Security is a complete and total financial disaster”

    sorry, this is total BS. — do a little research before vomiting prevarications and half-truths…

  • matt

    we are ******!

  • William

    We’re doomed. (Hysterical giggles from under bed clutching teddy bear and blanket.)

  • primrose

    Stick a fork in us.

  • Pension…what pension.

    You can kiss these puppies goodbye.

    You gotta do it on your own, fellas.

  • Karen 8888


  • fthisshit

    haha the rich get richer in Corporate state of America. While Corporate make billions outsourcing and playing pro illegal emigrant open border lobby, banks get bail because they f up everything by shoving credit cards up everyone ars,the rest of cockroaches us the fellow american consumer which is nothing more than a consumer and a taxpayer has to suffer while the tools and puppets of government sacrifice taxpayer money to bail them out while they enjoy the lobby money themselves.Now they want to sacrifice the pensions because the state has bailout the big companies and its broke, of course it’s broke sacrifice the cockroaches that will solve the problem. Republicans are Mongolians power hungry and money hungry and Democrats are worst hidden snakes they all get money from lobbyies but who get f is us th rest of cut our pension use our money to bail corporate america out open borders and lobby for it suck our blood to the max from both sides.This article sucks biased piece of sh.

  • fthisshit

    Oh yeah and they teach us the psychology of happiness:
    “True wealth is not about money. True wealth is about relationships, about good health, and about continued self-improvement.”
    while they them self become super rich.Indeed why you need money.Greed is reserved only for few.The rest have to shut their moth and learn they can never do anything about.we have just have to be good consumers and enjoy our sh life. while we get f up more by lobbyist shitty new laws that do nothing to control wall street greed but this is what america is a state of consumers when sh. get hard they throw the psychology of happiness. Boycott this garbage boycott business that do outsourcing or make anything on China or India or else where.For the world america it’s consumers also for corporate we nothing by consumers.Take your money out of banks.Stop paying taxes get payed by cash.Thats how you mess them up.Spend less buy product make in America that are more expensive at last.Stop voting never vote for anyone.

  • Social Security is a joke for retirement planning we all know and accept that. So as a student in college I learned to fend for myself and in the job(s) I held for 35 years, 2 kids college educated, serious illnesses paid mostly by insurance, I saved and invested. Now with a state sponsored, not paid pension we are able to retire comfortably, it takes some work, planning and effort but anyone should be able to save, and invest for their retirement future, just don’t spend it all every Friday night, put some dollars in the sock and take it to the bank or stock broker over time the investments we made have exceeded our initial planning. The politicans should not write healthcare proposals, the people should, the politicans should not write economic reform proposals the people should they pay the price, they suffer the consequesces.

  • Cat Callahan

    When a congressman retires, he continues to receive the same amount of money he received while serving as congressman! What a deal! How many of us retire with money like that? Also, if I paid into something for my retirement, I dam well had better get it back-especially when Goldman and Sachs are living like Kings! I hope we can throw out EVERY politician who voted in globalization! All the money I was forced to put into ss has gone to some immigrant who paid not a dime! I am super-pissed!

  • Matt

    If they can take our pensions they can take the billionaires’ and millionaires’ money and redistribute it.

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