Retirement Crisis Ahead in the U.S., It Won’t End Well Lombardi Letter 2020-01-23 07:02:49 There is a retirement crisis brewing in the U.S. economy. No one seems to be paying attention to it at the moment, but it could have severe consequences in the long term. Analysis & Predictions

Retirement Crisis Ahead in the U.S., It Won’t End Well

Retirement for Many Americans Could Be in Trouble

If you are close to retirement or saving for it, you better pay close attention to all that’s happening these days. Retirement for many Americans could be on the line.

I can’t stress this enough: there’s a massive crisis in the making in the U.S. economy when it comes to retirement and no one seems to be paying attention to it. There could be severe consequences in the coming years.


The soaring stock markets aren’t pricing in this risk, politicians don’t seem concerned, and mainstream economists aren’t bothering to look at it.

Understand this reality: pension funds across the U.S. don’t have enough money; they have massively unfunded liabilities. Putting it in even simpler words, they don’t have the money that they promised to those who contributed.

It’s not just the state and municipal pension funds (with unfunded liabilities of around $6.0 trillion, which long-term readers of Lombardi Letter have heard before) that are struggling with this conundrum.

Private pension funds are going through the same problem.

117 Pension Funds Are “Critical and Declining.”

Here’s some perspective on private pension funds.

According to a study by Cheiron, Inc.—a firm that advises public employers, multi-employer pension plans, non-profit organizations, and corporations—about 117 multi-employer pension plans that have about 1.4 million participants are underfunded by $56.5 billion. (Source: “Cheiron Study finds 117 multiemployer pension plans may fail within 20 years,” PR Newswire, December 17, 2019.)

Here’s the kicker: these pension funds have already told regulators and participants that they may fail within the next 20 years because they don’t have enough money for the full promised benefits.

Cheiron, Inc. says the financially distressed multi-employer pension plans are in a “critical and declining” phase.

Why are these pension funds struggling? Cheiron blames the underfunding of multi-employer pension funds on the Great Recession, industry deregulation, a smaller unionized workforce, and employers exiting due to bankruptcies or just simply withdrawing.

Why You Should Pay Attention

Dear reader, here’s the issue: if pensions don’t get properly funded, the retirees who depend on those pensions are going to suffer big-time.

Imagine this: you expected to get $1,000 a month from a pension that you contributed to your entire working life, but then the pension fund comes back to you and says, “We will only pay you $500.0.”

What would you do?

On a bigger scale, all of a sudden, a large number of Americans could be in financial trouble. Will they go out and spend? Who will help them financially? Remember, American consumers are the backbone of the U.S. economy. If consumers suffer, the U.S. economy will also suffer.

Let’s think outside the box as well. For those finding out that they will not be getting the money they were promised, how will they try to make up the difference in income? They could look to sell their assets, and this may make the economic problems much bigger.

As I said earlier, this is crisis in the making, and its consequences could be severe.

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