The world braces for retirement crisis
The article below is a long and well written analysis of the world wide melt down of defined benefit pension plans. Take a moment and read this article. If you are struggling to educate your members that action is needed now to protect and sustain your pension, then here is some of the evidence. Chicken Little said the sky is falling. The sky is falling in some places. Just because your city or state is not on the front lines of the “Pension Wars” does not mean you are immune to the trends. – Ron DeLord
From the story:
A global retirement crisis is bearing down on workers of all ages. Spawned years before the Great Recession and the financial meltdown in 2008, the crisis was significantly worsened by those twin traumas. It will play out for decades, and its consequences will be far-reaching. Many people will be forced to work well past the traditional retirement age of 65 — to 70 or even longer. Living standards will fall, and poverty rates will rise for the elderly in wealthy countries that built safety nets for seniors after World War II. In developing countries, people’s rising expectations will be frustrated if governments can’t afford retirement systems to replace the tradition of children caring for aging parents. The problems are emerging as the generation born after World War II moves into retirement.
The crisis is a convergence of three factors:
— Countries are slashing retirement benefits and raising the age to start collecting them. These countries are awash in debt after overspending last decade and racking up enormous deficits since the recession. Now, they face a demographics disaster as retirees live longer and falling birth rates mean there will be fewer workers to support them.
— Companies have eliminated traditional pension plans that cost employees nothing and guaranteed them a monthly check in retirement.
— Individuals spent freely and failed to save before the recession, and they saw much of their wealth disappear once it hit.
Those factors have been documented individually. What is less appreciated is their combined ferocity and their global scope. “Most countries are not ready to meet what is sure to be one of the defining challenges of the 21st century,” the Center for Strategic and International Studies, a Washington think tank, concluded in a report this fall.