Perfect Storm Factor One:

The decreasing returns on the contributions made to Social Security.

The more one has contributed to the system the less they will receive in a percentage of return versus the value of the life annuity benefits.

 

Perfect Storm Factor Two:

The disappearance of defined-benefit pension plans where the liability for providing a calculated lifetime pension benefit rests on the shoulders of the employer. Defined contribution plans, such as 401(k) s, transferred responsibility for making the plan work to the employee.

 

Perfect Storm Factor Three: 

The aging of the Baby Boomer generation will see them depart the workforce to become increasingly dependent upon Social Security and their retirement plan assets. This segment represents 27% of the total population and 47% of all households.

 

Perfect Storm Factor Four: 

The emergence of Generations X (born 1965 to 1979) and Y (born between 1980 and 2001) to replace the departing Boomer workforce will see these not only burdened with their own futures but with keeping the Social Security system solvent for their aging parents. In 2006 there were 7.2 persons between the age of 18 and 65 for each person over 65. That ratio will drop over  the next generation to 3.7 persons for each one over age 65. The Social Security System is expected to go into a negative-cash-flow condition within the next ten years.

 

Perfect Storm Factor Five:

The increasing longevity of the American population.

While all categories of the population are experiencing the impact of longer lifetimes it is the group approaching age 65 that is expected to see the most dramatic rise, due in part to the sheer numbers of them. For a married couple age 65, in good health, the mean averages state that at least one of them will still be alive at age 92. That means their retirement assets must last 27 years!