As the number of retirees grows, we are starting to see an increased strain on government pension funds. And a recent report from the Census Bureau is adding to that concern.
Twelve years from now, approximately one in five Americans will be of retirement age, according to the report. Additionally, by 2035, people 65 and older will outnumber those under 18 by about 2 million – something that has never happened in U.S. history.
The result of this shifting dynamic is especially disconcerting for those who work in or are retired from public service. For many of these people, government pensions are supposed to be a critical part of their retirement savings. But with fewer government employees and an increasing number of retirees, it is anticipated that those government retirement systems will not have enough money to cover pension benefits.
The Census Bureau study indicates that the ratio of active workers to those seeking benefits has dropped to 1.42 from the 2.43 it was at in 2002.
So the challenge facing current and future governments is how to keep these plans fully funded with fewer employees paying in to them.