This classy graphic conveys a nasty message. It shows the states of America and the percentage of their pension commitments that are funded. So, Illinois (in 2015) promised its employees $199 billion in retirement benefits. Right now, it’s $119.1 billion short Just to make sure you got that right - retired state employees have a pension fund that is light to sum of $119,000,000,000. Whoops. And it is not the worst state! Read all about it on Bloomberg.
So what? Well it means that a lot of retired people are living in a dream world that is about to turn into a nightmare. At some point this funding gap is going to materialise as reduced pension payments and that means less consumer spending.
What does Joe or Joeleana Average marketer do as a result of knowing this unfortunate story. The answer is 'probably very little'. The lack of funding of state pensions, like those for company employees, is all part of the same story. Older people are increasingly fragmenting into two groups. For most it is bad news. For a few (probably less than 20%) their rate of consumption (spending) will continue until it is constrained by health issues.
The story is simple the human implications are not. Dick Stroud
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