The Real Reason For America’s Looming Retirement Crisis

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Did you know that approximately 40 percent of all American workers have absolutely nothing saved for retirement? And did you know that pension funds in the United States are currently underfunded by about six trillion dollars? Social Security is supposed to be the underlying safety net for our entire retirement system, but it is essentially just a massive Ponzi scheme that everyone agrees is heading for a major disaster. Now that the Baby Boomers have started to retire, it is becoming clear that our society simply does not have the resources necessary to keep all of the promises that we have made to them. We are facing a retirement crisis of epic proportions, and by the end of this article you will understand the real reason why we have gotten into this mess.


Like so many other industrialized nations, America’s population is rapidly aging. In fact, in some rural areas of the country entire towns are in the process of slowly disappearing as their populations literally die off. The following is an excerpt from an outstanding article that was published by The Atlantic

It can be a pretty depressing proposition to start counting the deaths in this tiny town set among the hills and buttes of central Oregon.

Sherian Asher, 74, began keeping track a few years ago, despite herself, until she realized the tally: four deaths a month, in a town of 450. Then she stopped counting.

Fossil, Asher said, is “just going to die out.”

Businesses are disappearing, too. There used to be four gas stations, three grocery stores, three car dealers, and a lumber mill. Now, there’s just one restaurant in town open at night. The nearest hospital is more than an hour away, the nearest city, Bend, is two-and-a-half.

The Baby Boomers in particular pose a unique challenge for our society, because they represent a massive demographic bubble that has fundamentally altered our culture as they have passed through each stage of life. Now they are retiring in extremely large numbers, and many of them are completely unprepared for retirement.

Of course most of those coming after them are not preparing for retirement either. In fact, the executive director of the National Institute on Retirement Security says that 40 percent of all American workers have nothing saved up for retirement at all

“We have a lot of individuals who have nothing saved for retirement, about 40 percent of the workforce,” said Diane Oakley, executive director of the National Institute on Retirement Security. When her organization used census data to assess whether households were saving enough to retire with eight times their projected income, a very conservative estimate of retirement preparedness, “we found that 60 percent of households weren’t on track.”

Those numbers are absolutely staggering.

What in the world are we going to do once all of those people hit retirement age?

401(k) plans were supposed to revolutionize the way that Americans prepare for retirement, but that simply has not happened. In fact, USA Today is reporting that those that are participating in such plans only “have an average of $14,500 in their retirement accounts”…

The current retirement system in America hinges on the 401(k) plan, which replaced pensions as the go-to source of retirement income. But over the past 35 years that effort has been failing because participants are not contributing enough, asking for withdrawals and not repaying 401(k) loans. More participants are instead treating their 401(k) as a checking account and making very little effort to learn how to manage their investments. The chart below outlines how less than half of Americans now participate in retirement plans and those that do have an average of $14,500 in their retirement accounts, when they will need between 20 and 30 times that amount.

How long will $14,500 last you?

Perhaps if you are very thrifty it might last you six months.

Of course it is quite difficult to find money to put into your retirement account when you are living paycheck to paycheck, and some recent surveys have found that this is the case for about two-thirds of the population.

In the old days, many large companies offered pensions, but once 401(k) plans were introduced that number dropped significantly.

These days it is mostly federal, state and local government workers that are covered by pension plans, but unfortunately many of those pensions are severely underfunded.

This is something that I covered in substantial depth on the Economic Collapse Blog recently. In my piece, I pointed out a Bloomberg article that stated that overall there would be a pension funding gap of somewhere around 6 trillion dollars if honest numbers were being used. And that 6 trillion dollar shortfall would only apply if stock prices stay at current levels. If stock valuations simply returned to normal levels, pension funds would lose trillions upon trillions of dollars and we would very rapidly have a national crisis on our hands.

But if everything else fails, don’t we at least have Social Security?

I wouldn’t be so sure. Everyone knows that Social Security is essentially a Ponzi scheme that is living on borrowed time.

According to Reuters, one recent survey discovered that just 37 percent of all U.S. workers are “very or somewhat confident” that payouts from the system will continue at current levels in the future…

No surprise, then, that only 37 percent of workers are “very or somewhat confident” that Social Security will be able to maintain current benefit levels in the future, according to survey research by the Employee Benefit Research Institute (EBRI) – although confidence is much higher among older workers and retirees.

From a math standpoint, potential solutions to the problem are straightforward. The cuts can be avoided through increased revenue, benefit reductions or some combination of the two. But the politics are another matter.

Of course there are many reasons why we are in such a mess, but perhaps the biggest reason is because we don’t have nearly enough young people in the workforce paying taxes to support all of the older people that are retiring.

If we had tens of millions more taxpayers, pension funds all across the country would be much more solvent.

If we had tens of millions more taxpayers, the Social Security system would be just fine.

But we don’t have tens of millions more taxpayers, because we killed them.

Since Roe v. Wade was decided in 1973, we have killed close to 60 million children. Most of those children would be in the workforce today, but since they aren’t we have a major financial nightmare on our hands.

Throughout human history, the next generation has always taken care of the preceding generation once they have gotten too old to work.

But we have forfeited that right, because we committed mass murder. Now an unprecedented retirement crisis is looming, and nobody is going to have much sympathy for us when the whole system comes crashing down.

  • Robert Happek

    The idea that lack of retirement savings is due to an excessive number of abortions is nonsense. Lack of savings is the result of consumption exceeding production. We do not produce enough. Savings are excess of production over consumption. Has nothing to do with aborted fetuses. We have too many people working in services and not enough people producing something. Wealth is the flow of production.

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    • jaxon64

      You are 50% right on your basic principles but lack any insight on causality.
      Demographics is a HUGE basis for “consumption exceeding production” in the overall scope. With millennials having birthrates below replacement levels, tens of millions of potential producers also aborted and aging boomers who still consume but no longer produce–these factors alone equate to greater consumption than production.
      Throw in the dwindling “living wage” careers for the middle class due to automation, outsourcing/off-shoring and obsolescence and it is the perfect storm.
      I work with appx 20 other close associates. They may have an I-phone and a mortgage but most bring bag lunch, drive used or 10-year old cars, wear the same suits and work clothes for years and do their best to afford the costs of raising their kids on stagnant salaries. Several have no cable, grow their own veggies and even some small livestock–this is far from the lavish consumption you insinuate is the issue.

      • Sam

        The real problem is the rich get richer, the poor get poorer. The top richest people have more wealth than the bottom few billion combined and the problem gets worse every year.

    • krinks

      You are partially correct. There are 60 million tax payers missing but they’ve been replaced with 60 million foreign born tax payers.

  • KMH

    Not one more generation of thriving believing Jews or Christians either. All dying out. No like minded marriages (let alone any marriage).
    Just dying out of every God ordained institution.
    Time for Jesus to come back!!!! No more time!

  • futuret
  • SafetyViking

    Because people are stupid, trend-following herd-sheeple that kept up with the Joneses for too long to save any money for retirement?

  • Jim Davis

    What in the world are we going to do once all of those people hit retirement age?

    They aren’t going to be able to retire. But will their even be any jobs for them?

  • iris

    I agree with you about the abortion issue, Michael. God knows all about irony. It’s more than the fact that less people are here now to contribute to the tax base, it’s about the fact that the Baby Boomers sacrificed their own, even encouraging the sacrifice of their would be grandchildren for the sake of convenience/appearances, and now, there are fewer young people who can or want to take care of their elders, or their own children. Our children and grandchildren are struggling just to make ends meet.

    Another reason for this, in my opinion, is that very few tithe anymore. We lived paycheck to paycheck for years, but as we grew closer to The Lord Jesus Christ, we felt drawn to begin giving more to the things of God. He surely blessed us financially for doing so. The more we gave, the more He blessed us. Our perspective and experience has not been one of compulsion or for earthly gain, and I believe God saw our hearts and chose to provide generously for us because of that. He can give and He can take away, but as long as we have Him, we have everything, and He will never leave us or forsake us.

    • algol2000

      Tithing is illegal as the levitical temple no longer exists. But giving and charitable works are not.

      • jaxon64

        Aren’t you the semantics king algo!
        If we call it “charitable, giving or even “helping to spread the word” it is okay–if you dare use the word “tithing” it is illegal…got it.
        Just wow, with the legalists who miss the forest for the trees.

        • algol2000

          Thank you for your sense of humor. But another reason it was abolished: “helping to spread the word”

          Jesus commands us to take on that initiative. It cannot be delegated. We “spread the word” through our strength of character.

      • iris

        Well, guess you didn’t read what I wrote. To reiterate, we never felt under compulsion to do that, and we still don’t. We do it because we love God and love others and it gives us great joy to share part of what He has given us. If we want to get technical, we owe everything we have and are to Him, every breath, but really, it’s all about what He has done for humanity, and what He does and will do. Two of my favorite NT verses are; Philippians 2:13, “for it is God who is at work in you, both to will and to work for His good pleasure”, and 1 Cor. 4:7, “and what do you have that you did not receive?”. In the second verse, Paul was speaking to the Corinthians about spiritual issues, not physical ones, in the context.

        I get where you were coming from, though. God bless.

  • Georgiaboy61

    The author is exactly right – the demographic crisis lies at the heart of the retirement problem, and the demographic crisis is simply a polite way of referring to all of those babies who weren’t born and didn’t grow and mature into productive citizens able to sustain our economy on some sort of sound fiscal basis.

    The legalization of abortion is also at the heart of the immigration and illegal immigration problems our nation faces. Companies large and small claim they depend on “migrants” to do the jobs Americans won’t do – but then, how can Americans do those jobs when they aren’t there in the first place?

    There is another cold, hard truth which must be faced: human beings are living longer, and those gained years have to be paid for somehow. None of our retirement programs were designed to sustain people through a thirty or even forty-year long retirement funded on the backs of taxpayers and pension contributors. Back when the original old-age pensions were enacted, life expectancies were much lower, and the average recipient of a pension lived only five-ten years in which he would collect a payout – a world removed from today’s situation.

    It would help the bottom line of our overstressed retirement programs, public and private alike, if the U.S. would cease policing the world and dumping billions of USD into failed social engineering efforts in places like Afghanistan. What ever happened to the notion that charity begins at home?

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    • Gay Veteran

      “…Since Roe v. Wade was decided in 1973, we have killed close to 60 million children. Most of those children would be in the workforce today….”

      and WHERE would 60 million jobs come from???
      we don’t have enough jobs for people now

      • Georgiaboy61

        If those millions of unborn children had in fact been born, they would have filled the spots in Europe now occupied by tens of millions of Turks, Arabs and other third-worlders. The unborn of Europe would also have contributed greatly to economic vitality, and spurred growth by sheer force of numbers alone. Think of all of the goods and services which would be consumed by those sixty million…

        • Gay Veteran

          Europe was in bad economic shape BEFORE the Muslim invasion, millions of more Europeans would have meant more unemployment

          • Georgiaboy61

            I do not agree – but think as you wish.

  • ramrodd

    you managed to ignore the decades of shipped US jobs via Premature/Unconstitutional Trade Deals!!!!!

  • DJohn1

    The problem as I see it is we have a game of economics set up that is nearly impossible to win.
    Our Congress has voted in a socialist/communist system of rules.
    Joe worked all his life. He earned good wages and saved money, bought a house, raised a family back when jobs were available.
    Peter on the other hand was one string of disaster away from bankruptcy most of his life. He had 5 kids, divorced, owes multibucks in child support, and he has no pension other than social security.
    At 70 both men get sick and go into a local hospital.
    Peter has nothing. So they give it to him as Medicaid. He gets treated without financial penalty because he is broke financially.
    Joe has a house, some retirement savings 2 pensions and Social Security. I know Joe. I worked with him for many years. A more hard working man you will seldom see. He is not eligible for Medicaid. So they start taking away what Joe has spent a lifetime earning.
    It does not stop there. Eventually Joe is just as bad off as Peter was.
    Joe is a Veteran and proud of it.
    Yet he made over 30,000 a year and is ineligible for benefits from the VA because he earned a living thanks to an executive order signed by President Bush in about 2005. Peter is also a Veteran and because he was unsuccessful in life the Veterans administration gives him free benefits including prescriptions.
    We have legislated a welfare state.
    I am not proposing ending the welfare. I am proposing putting Joe under the same umbrella as Peter. Rewarding sloth over enterprising and hard working young people is just plain wrong.
    Judging qualification for Health Care at the Veteran’s administration by how much you made in life is also wrong. Don’t remember them telling us this in 1966 when I lost 9 our 12 of the people I worked with every day to Vietnam.
    That wasn’t even voted on. It was an “Executive Order” and the guy that did it had some pretty shady past dealings with an Air National Guard.
    The only way we will change the rest of it is to change direction in the way we do things. One direction being vocational education and apprenticeships instead of college degrees.
    It will not change over night. It will take years to overcome the mistakes put forward as the economic game rules set forth by our Congress.
    None of this would be occurring today if the Congress had taken a different path.
    As for abortion, set up guidelines to support and care for the mothers of these babies. Get them straightened out and working as single Moms.
    Put in laws that draft anyone that does not meet their child support payments then take it directly out their pay.

  • alan2102

    “Social Security…is just a massive Ponzi scheme that everyone agrees is heading for a major disaster.”

    No, “everyone” does NOT agree with that, and in fact most intelligent analysts reject it completely as a neoliberal lie propagated by the likes of Pete Peterson and the Mont Pelerin (asshole) crowd. It is a lie propagated for politcal purposes — the main purpose being to soften-up the masses so that they will accept the coming attempt to feudalize and impoverish them. “We just can’t afford stuff anymore! The country is BROKE! Gotta cut off your social security! No more money!” — All a bunch of bullshit, but bullshit that is being carefully cultivated right now, through hundreds of venues, with comments just like the one quoted above: “EVERYONE AGREES that SS is a massive ponzi scheme”. Right. Just keep repeating those lies often enough, and you can get millions to believe them.

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  • Tatiana Covington

    Very well, abolish aging itself. Don’t be senile and decrepit at 90, but be young and vigorous at 200.

    Aging causes all the trouble. Get rid of it!

  • Tatiana Covington

    The other choice is serious robotics!