Economics Explained The $400 Trillion Problem No One Wants to Talk About
Nov 17, 2025
The global pension crisis is reaching a tipping point as the worker-to-retiree ratio plummets. With projections showing a $400 trillion retirement gap by 2050, countries are grappling with potential insolvencies. Examples from Japan and France highlight unique demographic challenges. Solutions like Denmark's retirement age tied to life expectancy and Sweden's automatic adjustments are discussed. The podcast delves into why many politicians shy away from necessary reforms, raising the stakes for future generations.
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Demographics Broke The Pension Model
- Postwar demographics made pay-as-you-go pensions viable but those conditions no longer exist.
- Falling birthrates and longer lifespans have created a global dependency ratio crisis.
Pay-As-You-Go Is Vulnerable To Demographics
- Most pensions use pay-as-you-go funding where today's workers pay current retirees.
- That model collapses if the worker-to-retiree ratio falls enough to outpace contributions.
Japan's Lost Generation And Debt Spiral
- Japan's working-age population fell by 13 million since 1995, leaving a very old population.
- The government borrows heavily to cover rising pension and healthcare costs, pushing debt above 250% of GDP.