Pensions & annuities
Converting a working life's savings into income that lasts as long as you do.
The invention
The problem. People outlive their ability to work, and the amount needed depends on an unknowable date.
American Express established the first US corporate pension in 1875; Bismarck's state pension followed in 1889, set at 70 when life expectancy was well below it. Annuities are older still, dating to Roman military practice. All solve the same problem: you cannot save the right amount when you do not know how long you have.
United automobile worker (Detroit, Mich.), March 1, 1941
1941-03-01 · Library of Congress · Public domain
Where it has failed
Not a list of disasters. A pattern library.
- 1963South Bend, Indiana
Studebaker
The automaker's collapse left thousands of workers with a fraction of promised pensions, leading directly to ERISA.
A promise from an employer is only as durable as the employer. Pension protection law exists because of this specific failure.
- 2000sUnited States and UK
The great de-risking
Employers moved en masse from defined benefit to defined contribution, transferring longevity and market risk to individuals.
Risk did not disappear; it was reassigned to the person least equipped to model it. That reassignment is why tools like this exist.
Where it stands today
You now have the shape. Here is the reading.
Live from public data, pulled at request time. Read it with the failures above in mind — not because a repeat is due, but because knowing the mechanism is what lets you recognise one early.
Personal saving rate
U.S. Bureau of Economic Analysis via FRED
No data returned
FRED (St. Louis Fed) needs FRED_API_KEY in your environment. It is free to obtain — see the sources screen for the link.
U.S. Bureau of Economic Analysis via FRED
In your ledger
The de-risking episode is the reason forecasting your own cash flow is now your job rather than an actuary's.
See it in the demoKeep reading