The Wobbly Three-legged Stool

Even though workers are commemorated annually with a one-day break from labor, a more permanent break occurs at retirement. Retirement from a life of work is still a relatively modern development. Preparing for it financially and psychologically continues to challenge even the most careful planners. According to the Social Security Administration, "the three major elements of your retirement portfolio are benefits from pensions, savings and investments, and Social Security benefits." The Social Security Administration expects the program to be unable to meet its financial obligations beginning in 2042. Simply put, the number of people taking money out of the system in 2042 will be greater than the number of people putting money into it. According to statistics released by the Social Security Administration, by 2031, there will be almost twice as many older Americans than there are today, rising from the current 37 million to 71 million over that period. At present, the government's solution for addressing this imbalance is to increase the retirement age, thus delaying payouts to now younger workers on their eventual retirements.  

Since 1971 the life expectancy of the average 65-year-old in the rich world has improved by four to five years. By 2050, forecasts suggest, life expectancies will increase another three years on top of that. Until now, people have converted all that extra lifespan into leisure time. The average retirement age in the OECD in 2010 was 63, almost one year lower than in 1970. Living longer, and retiring early, might not be a problem if the supply of workers were increasing, but declining fertility rates imply that by 2050 there will be just 2.6 American workers supporting each pensioner. The figures for France, Germany and Italy will be 1.9, 1.6 and 1.5 respectively, and younger wage earners will be shoring up pension systems nearly everywhere. 

from Threes, Chapter 8, “Threes in Business and Technology”