[api]

I do not expect the pension to last. It seems like a failed socioeconomic experiment. Corruption and mismanagement play a role for sure but the big killer is increasing life spans coupled with declining fertility. With 1.5-2 kids per couple and an extra 20 years of retirement the math does not work. The only thing that could save it is crazy economic growth but that is unlikely.

[onlyrealcuzzo]

Exactly. It might not sound like a big deal if life expectancy increases from 70-75. That's only a 7% increase!

But, when the retirement age is 65, you're retired for TWICE as long. That's a huge difference. Either pension contributions need to increase AT LEAST two-fold, benefits cut in half, or retirement age is always set at life-expectancy - 5 years.

Not to mention, somehow now 62 is the new 65. Making the problem almost 3-times as bad.

[jamesblonde]

You'll be fine in the States. Life expectancy is decreasing - https://edition.cnn.com/2017/12/21/health/us-life-expectancy...

Meanwhile, in the rest of the civilized world, we are increasing pension age, replacing defined benefits pensions with defined contributions, and lots of micro effects. The pension system is, of course, workable. It just needs adjusting to longer expected lifespans and, of course, increased funding from people of working age.

[lotsofpulp]

No, the incentives of taxpayer funded defined benefit pensions (lifelong annuities for worker and spouse) are unsustainable.

Problem 1 is the inability to forecast 30 years into the future, problem 2 is the people whose money is being spent (future taxpayers) aren't in the decision making process.

Problem 3 is low voter turnout among non government employee populations, so politicians do whatever they have to make sure government employee unions vote for them.

Problem 4 is no requirement to actually provide accurate funding, because the costs will be understated in the first place (see problem 3), and the liabilities are far into the future so money will be diverted for other pressing matters.

If you think the above is not correct, all you need to do is look at the funding status for all the taxpayer funded pensions in the US, conveniently exempt from the rules that privately funded pensions have to adhere to (which made them disappear because it turns out they're too costly).

However, as long as the US can print money (I.e. have a powerful military), then they can inflate away all these debts the taxpayers have so just try to make sure your assets are inflation resistant, preferably in high cash flow businesses with barriers to entry that can sustain price increases.

[jamesblonde]

You didn't read what I wrote. My first point was the defined benefits are already phased on in the rest of the developed world. Your other points do not address the main point of whether the US can afford to pay pensions. Of course it can. Countries like Italy still survive, even while funding 25% of people in the old system (defined benefits).

[fallingfrog]

But those numbers are averages. You can't form your retirement plan to live to the age of exactly 75 no matter what the life expectancy is- the real value could be anywhere from 70 to 105..