We have been talking about the pension crisis for years now. It's without a doubt one of the biggest, financial disasters.
These pools of capital, responsible for paying out retirement benefits, are terribly underfunded. So anyone depending on a pension in their retirement years should seriously consider a Plan B – and sooner rather than later.
We aren't alone in sounding the alarm on pensions.
The World Economic Forum reported that in 2015, worldwide pensions were underfunded by $70 TRILLION. That is larger than the top 20 economies in the world, combined.
In the US alone, federal, state, and local government pensions are $7 trillion short on the funding they need to pay what they have promised.
And none of this includes Social Security's almost $50 trillion of unfunded obligations.
Even the private sector isn't in great shape. US corporate pensions are a combined $553 billion in the hole. And one quarter of those funds are expected to go broke within a decade.
Most pensions require about an 8% annual return to break even (and make all the payments they've promised)… historically, these funds could achieve decent returns with a mix of conservative, fixed-income investments. But after a decade of ultra-low interest rates, achieving an 8% return in bonds would be a dream.
So these pensions are forced to take on more and more risk just to break even (oh, and deal with corrupt government officials)…
They're essentially taking the teachers' and firemen's retirement money and betting it on black… hoping to dig themselves out of the enormous hole they're in.
That means buying more stocks (at what may be the top of the market)… and investing in global real estate (another hugely inflated asset)…