Pension Issues causing Riots in France, Issues in USA (Patreon)
Content
Doing a quick discovery into the growing pension problems around the world. It is something we all need to be aware of to plan ahead. The future however will have an uphill battle, so people need to prepare.
I will look at Data from France, Chicago (a microcosm of the US) and the USA. But countries all over the world are facing the same issues.
Like France's Social Security system, the United States faces demographic challenges. It follows a pay-as-you-go model where the current workforce funds the benefits for retirees. However, the replacement rate in the US is lower, at 51% of preretirement earnings, and it has been running a deficit since 2021. Trustees project that the system's combined reserves will be exhausted by 2035 unless new revenue streams are established. Given the concerns about the solvency of Social Security, some people are opting to withdraw from the system early.
However, unlike France, the US has alternative options. Many companies and local governments offer pensions or tax-advantaged retirement plans such as 401(k)s to encourage workers to save for their future. According to the OECD, when combined with Social Security, these plans provide an average of 96% coverage of earnings.
Certain places have extreme issues eg CHICAGO: Although there are assertions of Chicago's financial condition improving, the city's fiscal future is still overshadowed by the significant pension debt of $48 billion for its primary retirement systems.
A large portion of property-tax revenue, approximately 80%, is allocated towards pensions in Chicago. However, the city's four pension systems possess inadequate assets to cover merely 25% of the amounts owed to current and retired workers. This percentage is lower than the assets held by Detroit's pension funds when it filed for Chapter 9 bankruptcy a decade ago.
Chicago's Unfunded Pension Liability is Exploding
So is the US in general - about 956,000 of Debt Per Person!!!! YES $1M
Problem is Demographics, aging populations and increasing costs:
In France, like most other places on Earth there are not enough workers to support those retired due to negative birth rates - As people live longer and the population grows older, the number of active workers who fund each pension check is shrinking. According to the government, France had more than four workers for every retiree in the early 1960s. That figure stood at 1.7 in 2020, and it is projected to fall to 1.5 over the next decade, according to an independent panel of economists, lawmakers and union leaders advising the government on pensions.
SO to fight this - they are increasing retirement ages and of course taxes eg Chicago Property Tax - and an insane 80% of property-tax dollars in Chicago go to fund unfunded pensions - not much money left for anything else.
I fear more crime, more poverty, more desperation as we go fwd unless governments can stop reckless spending and reckless taxation. Reckless taxation only makes tax payers move to a cheaper jurisdiction. Hardworking families will flee these regimes in huge numbers along with businesses if this madness continues.
Sorry for the grief tidings on this Easter Weekend but it has been on my mind.