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Why Declining Birth Rates Threaten Public Pension Solvency
Description
In Episode 20 of The Demographics Podcast, Lucas and Luna examine how falling birth rates directly undermine the math of pay-as-you-go public pension systems. Using the US Social Security trust fund depletion date (projected 2035) as the anchor, they trace the arithmetic: fewer workers per retiree means either higher taxes, lower benefits, or later retirement ages. They compare the US approach (modest adjustments, trust fund accounting) with Sweden's notional defined-contribution system and Chile's fully funded individual accounts. The hosts drill into a specific number — the 2.8-to-1 worker-to-retiree ratio that prevailed when Social Security was created in 1935 versus today's roughly 2.8-to-1 ratio that is still projected to fall to 2-to-1 by 2050. Luna challenges whether immigration can fill the gap; Lucas points to South Korea's extreme case as a warning. The episode closes on a forward-looking note about whether younger generations are already pricing in lower expectations for their own retirement.