Retirement & Pensions

As a Boomer, Is My Pension At Risk?

Gold Alliance disclaimer

While current retirees may complain their pensions are too low, future retirees will likely receive even lower benefits. This picture becomes clear when we look at demographics and the economic reality. The debate over pensions is part of the issues that have led to waves of public school teachers striking across the country. And it’s an issue that isn’t isolated to teachers—all other public sector workers are facing it as well.

Key to this issue and other economic problems is the fact that the world’s population is steadily aging.

Life spans peak—fertility rates plummet

The demographic challenges we are facing are unprecedented. Birth rates are at a historic low, close to or below replacement level, while the average life span now exceeds 80.

While the reasons behind these developments are great on their own (improvements in artificial birth control; better nutrition and health care), combined they have a serious impact.

Over just 16 years (1960–1976), the fertility rate in the US plunged from 3.65 births per women to just 1.76. It’s remained at that level ever since—no one has found a way to increase the rate.

More retirees need support, fewer people to support them

Let’s look at the US population by age. The Baby Boomer segment (50- to 59-year-olds) is, of course, getting older, but they are also getting older than people used to. So, there will be a need for support for longer time. At the same time, birth rates are low. We can view the demographic spread as a pyramid, where the top (older people) will widen while the bottom (younger people) will narrow.

Our main challenge is this: How can a diminishing group of working-age people support an increasing number of retirees?


We can illustrate this by looking at how many workers support each Social Security recipient. In 1940, the number was 160. In 1950, 16.5. By 1960, 5.1. In 2030, it will be just 2.3.

Likewise, states and local governments are asking young workers to support those in the pension system.

The trend is obvious. So is the challenge. How can workers be expected to support an increasing number of retirees while working, raising a family, and paying mortgage, food, and healthcare?

Despite the clear challenge, no one wants to admit reality. It’s easier to just ignore it.

Who will pick up the bill?

We ignore it by thinking that taxpayers, at some undefined point in the future, will simply pick up the difference. This is quite evident in public pensions, and it will become a serious issue across the board within the next decade.