Retirees Were Promised Pensions. Globally, We’re Going to Be $400 Trillion Short

Johnny Knoxville in "Bad Grandpa" being pushed in a shopping cart
Johnny Knoxville in Bad Grandpa displays what many of us fear in our retirement years. | MTV Films

Everyone hopes to retire comfortably at some point. But there’s a looming retirement crisis that is going to make it very difficult to do so for millions, and perhaps billions, of people. In the United States, we have protections, pensions, and social programs for retired people, meant to help get them through their golden years as comfortably as possible. But they’re typically not enough to live off of. These programs are best used in conjunction with private savings and investments.
As we know, many people either weren’t able to save or neglected to. Millions more were counting on their pensions to come through for them. Pensions — regular payments from an employer paid out after retirement — are in serious trouble. The short and sweet of it is the people and organizations who are on the hook to pay out those pensions are coming up short — trillions of dollars short.

A looming shortfall

A study from the World Economic Forum says by the year 2050, that shortfall worldwide will reach $400 trillion in overall retirement savings. That number is hard to wrap your head around. But for perspective consider this: That figure is roughly five times the size of the current global economy.
This can be particularly hard to swallow for people who were promised pensions and the support of social programs. But it’s quickly becoming clear that as lifespans increase and more people get to retirement age, we simply can’t afford it. If we look at the retirement savings shortfall and slice it up proportionately, only about a quarter of the issue is due to a lack of individual savings, according to the World Economic Forum. The remaining 75% is rooted in the fact that public and private pensions are unfunded.
What does that mean? You might not get your pension unless things are addressed. The report looks at the current and expected (by 2050) shortfalls in eight leading countries, including the United States. We’ll look at each, and the specific shortfalls expected, in alphabetical order from the World Economic Forum analysis.

Australia: $9 trillion gap (by 2050)

A kangaroo hops through the Outback landscape
A kangaroo hops through the Outback landscape, not worrying about a pension. | Ian Waldie/Getty Images

Things don’t look great for Australian retirees, mate. As of 2015, there’s only a $1 trillion retirement savings gap, according to the World Economic Forum analysis. This is nothing compared to other countries, but it is still sizable. It’s important to remember Australia’s population is roughly equal to that of Texas. So the issue is a bit smaller than it is in the U.S. Even so, the gapĀ could total $9 trillion by 2050.

Canada: $13 trillion

Canadian fans root for their hockey team
Canadian fans root for their hockey team. | Alexander Nemenov/AFP/Getty Images

Similar to Australia, Canada’s retirement problems, when compared to the U.S., are miniaturized but not necessarily simplified. Canada’s total population is more or less equal to that of California, for example. And as of 2015, Canada’s retirement savings gap adds up to $3 trillion. Also like Australia, that’s expected to grow by 5%, annually, by 2050. By mid-century, Canada is looking at a shortfall of $13 trillion.

China: $119 trillion

Scene from "The Office" with Michael Scott holding up magainze that says "China is on the move"
The Office‘s Michael Scott expresses worry about China. | NBC

China is the proverbial “elephant in the room” in a lot of ways on the international stage. The retirement savings crisis is but one of them, and as of 2015, the Chinese are facing a shortfall of $11 trillion. That is expected to grow by 7% annually. And by 2050, China is looking at an enormous gap: $119 trillion. China is still a developing economy, though, and some strategic planning for the country’s roughly 1.4 billion people could go a long way.

India: $85 trillion

Indian fans celebrate at a cricket match.
Indian fans celebrate at a cricket match. | Scott Barbour/Getty Images

China and India have a lot in common. They’re both located on the Asian continent, for starters, and both are home to more than a billion people each. They’re massive countries. And though India is only facing a retirement shortfall of $3 trillion as of 2015, its problems are set to grow faster than any other country on the list. Assuming 10% annual growth in the savings gap, India’s gulf is expected to grow to $85 trillion by 2050.

Japan: $26 trillion

A crowd of people wave Japanese flags
A crowd of people wave Japanese flags. | Koichi Kamoshida/Getty Images

The Japanese are lucky. According to the World Economic Forum analysis, the Japanese are expected to see their retirement savings gap grow at the slowest rate of any other country: 2% annually. Still, the Japanese have a very big issue to the tune of $11 trillion, as of 2015. By 2050, and assuming that 2% growth, Japan is staring at a $26 trillion shortfall.

Netherlands: $6 trillion

A Netherlands fan waves a flag
A Netherlands fan waves a flag. | Stuart Franklin/Getty Images

The $6 trillion gap the Netherlands is facing come 2050 seems rather pedestrian when compared to some of the other countries on this list. Right now, the Netherlands only has a $2 trillion retirement and pension savings gap. The analysis assumes 4% annual growth in that gap, leading us to $6 trillion by 2050. Still, when you compare that to the $119 trillion problem China has, folks in the Netherlands should breathe easy.

UK: $33 trillion

A pedestrian shelters from the rain beneath a Union Jack-themed umbrella.
A pedestrian shelters from the rain beneath a Union Jack-themed umbrella. | Justin Tallis/AFP/Getty Images

The U.K. is looking at a retirement crisis like every other country on this list. It has a total population of more than 65 million, so it’s much bigger than some countries, such as Australia or Canada. And per the analysis, the U.K.’s 65 million (most of whom will presumably retire) will be $33 trillion short by 2050 for retirement. That takes the 2015 gap of $8 trillion and assumes 4% annual growth.

United States: $137 trillion

A flag flies over the U.S. Capitol.
A flag flies over the U.S. Capitol. | Paul J. Richards/AFP/Getty Images

Perhaps unsurprisingly, the U.S. is looking at the biggest retirement savings gap, by 2050, in the world. Right now, the U.S. is looking at a pension and savings shortfall of $28 trillion, and the World Economic Forum is assuming an annual growth rate on that figure of 5%. Ultimately, that will result in the gap swelling to $137 trillion — a figure that is hard to get your head around.
Globally, what does it all mean? And what can you do about it?

Global total: $400 trillion shortfall by 2050

couple in chairs on the beach looking at a sunset, celebrating retirement
A couple enjoy retirement — having secured their pension funds. |

The figure the World Economic Forum’s analysis arrives at is $400 trillion. That assumes we take the 2015 shortfalls for these eight leading nations and multiply them by the estimated rates of annual growth. By 2050, we end up with nearly half a quadrillion dollars’ worth of retirement savings shortfalls. That number is hard to comprehend. And it’s even harder to try to find a way to pare it down.
But this could have very real implications for everyone, specifically for young people today. By 2050, millennials will be retiring. If the U.S. is facing a $137 trillion shortfall in retirement savings, you can be guaranteed retiring won’t be as smooth of a process as it is today. But there’s a lot that can happen between now and then.
The question you should be asking yourself is what you can do to put yourself in a better position to retire. Thankfully, there’s a lot of advice out there.
The simplest and easiest way to get started is to begin padding your savings when you’re young. Interest rates can and will do wonders. So start tossing money into a savings account as soon as possible. If you haven’t already, enroll in your employer’s 401(k) program (if available), and open up an IRA or Roth IRA account. You can and should be sticking to a budget and controlling your spending, as well as trying to increase your income by getting a better job or raise.
Just a little bit of effort now will pay off in spades down the road. But you need to have some foresight — something millions of people evidently didn’t have over the past several decades.