America's pension time bomb

Pension war looms in U.S. as baby boomers start to retire - Jan. 13, 2006

I wonder how this will be worked out?

With Social Security, the system is flawed because you can't Guarantee to pay someone more than they paid into the system. It’s called “insurance” if you do that and that only works when just a few people get paid. Imagine insuring people for something that is absolutely going to happen. Social Security “insures” people against getting old, but everyone gets old. (Some people do die before retiring, but still that’s like insuring people home against NOT burning down, much more people will reach retirement age than don’t)

With Private companies, how long and how much can they pay people who have stopped working for them? It works with a booming economy, or growing company, and when the retirement age and the “life expectancy” age are close. But all of those are changing now.

The only way to deal with this is something like 401k’s or our TSP. Like a pension, the employer pays a certain amount into the fund, but unlike pension, the amount you get after you retire is FIXED to the total in the fund.