22 Statistics About America’s Coming Pension Crisis
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.That is pretty sobering news... news we have known about and pretended didn't exist.
The thing is that there are some very concrete facts to back it all up.
Pension plans everywhere are failing to meet their obligations.
State and local governments are cutting back and are raising retirement ages.
Social Security is now officially in the red.
Social Security will pay out more this year than it gets in payroll taxes, marking the first time since the program will be in the red since it was overhauled in 1983"Financial security" will be non-existent for many people in this country in the not-so-distant future.
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.
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.
16 - 35% 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.
21 - According 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.
The reality is that our economy is in real trouble despite the short term "good news" that you might be fed on cable TV news - some of it being just pre-election political posturing.
Oh.. and did I mention that yet another top economic adviser to Mr. Obama is jumping ship?
This from Zerohedge:
If the latest rumor about the imminent defection of one of the three remaining policy stalwarts is true, it means the administration's economic policy is on the verge of collapse.
More people than ever before are on food stamps and we are sustaining a pretty high jobless rate in this country month after month after month. The number of Americans who are receiving food stamps is now at a record 40.8 million; that's an eighth of our population! (May numbers) and those numbers are projected to go even higher. The jobless rate has hovered around 9.6% which represents a 27-year high.
We are definitely seeing food inflation... and with wheat shortages beginning to hit, and other commodity prices on the rise, consumer prices are bound to climb higher.
Unless we stop this insane spending in Washington and make some real cuts in government spending, especially in entitlement programs and nanny state legislation, then we are truly going to see some financial devastation in this country. Unsustainable social programs and union demands have brought us to a cliff. Now they want to tax you more while creating more government dependency. We can't afford Republican borrowing, and we can't afford Progressive Socialist Democrat spending any longer.
Be very very careful how you cast your votes in these August primaries and in the November elections. If we do not truly change the course this country is on, we will be facing some pretty dire circumstances.
No..... it's a reality check.