Something Big, Bad And Ugly Is Taking Place In The U.S. Retirement Market

While the highly inflated value of the U.S. Retirement Market reached a new high this year, something is seriously wrong when we look behind the scenes.  Of course, Americans have no idea that the U.S. Retirement Market is only a few steps from falling off the cliff, because their eyes are focused on the shiny spinning roulette wheel called the Wall Street Stock Market.

Yes, everyone continues to place their bets, hoping and praying that they will win it big, so they can retire in style.  Unfortunately, American gamblers at the casino have no idea that the HOUSE is out of money.  The only thing remaining in their backroom vaults is a small stash of cash and a bunch of IOU’s and debts.

According to the ICI – Investment Company Institute, the U.S. Retirement Market hit a new record $26.1 trillion in the first quarter of 2017:

This new record high in U.S. Retirement assets is most certainly a good moral booster for Americans.  As their retirement assets continue to increase, this provides them a wonderful incentive to fork over more of their hard-earned monthly income to feed the DARK HOLE I label the U.S. Retirement PAC-MAN Monster.

Regretably, Americans have no idea that their monthly retirement contributions are not being saved or stored in a nice gold vault, rather they are being used to pay the lucky slobs who retired before them  Now, when I say SLOBS or POOR SLOBS, I am not being derogatory.  However, I am using the word as a Wall Street Banker would label those they prey upon.

Regardless, as the U.S. Retirement Market continued higher over the past several years, the amount of net contributions have gone into negative territory.  As I have mentioned before, this is a beginning sign of a Ponzi Scheme in its last stages.  In my previous article, WARNING: U.S. Ponzi Retirement Market In Big Trouble, Protect With Precious Metals, I posted the following chart:

As we can see in the chart, the Private Defined Contribution (DC) Plans paid out $28.7 billion more than they took in in 2014…. the last year the Investment Company Institute provided data.  Simply, Private DC Plans are mostly 401K’s.  If we look up at the first chart with the colorful breakdown in the different U.S. Retirement Plans, DC Plans (mostly 401K’s shown in YELLOW) were valued at $7.3 trillion.

To see U.S. DC plans now paying out more than they receive is certainly bad news… but it isn’t as bad as what is taking place in the U.S. DB – Defined Benefit Plan market.  A Defined Benefit Plan is where an employer pays the employee a specific pension payment, based on the employees earning history.

If we look at the U.S. Private DC Plan chart below, we can plainly see what a serious mess it is in:

The GREEN BARS show how much is paid out to retired employees, the BLUE BARS are what is contributed into the DB Plan, and the RED BARS denote how much more is going out than coming in.  It doesn’t take much of a brain surgeon to figure out this is not sustainable.

To get a better look at how much RED is going on the U.S. Private Sector DB Plan, I presented the figures in the chart below:

As of the last year the Investment Company Institute published the figures (2014), $123.7 billion more was paid out to employees in the Private Sector DB Plan then came in.  While larger payouts have been going out than funds coming in for quite some time, they have also reached a new RECORD HIGH.  Ain’t records great?

Okay… let’s bring back the first chart with all the wonderful colors:

The Private Sector DB Plan is shown in the nice GREEN COLOR above at $3 trillion in assets.  Again, these are from the Private Sector.  If we look at the Government DB Plans in PURPLE, they are valued at $5.5 trillion.  Unfortunately, the Government DB Plans (State & Federal) Pension Plans are in much worse shape than the Private Sector DB Plans.

How much worse?  Look at the chart below:

The Private Sector DB Plans are underfunded by $500 billion, while the Federal and State-Local DB Plans are underfunded by $3.8 trllion (adding both columns together).  Even more amusing is that the Federal DB Pension Plans hold a larger underfunded liability than their total assets.  While we have heard in the news that the State Pension Plans are in big trouble, we can plainly see the Federal Govt Pension Plans are in much worse shape… LOL.

That being said, the U.S. Retirement Market is filled with assets that are based on highly inflated values.  I took a look at the Federal Reserve Board of Governors Q1 2017 Statistical Review and listed the top Private Sector DB Plans assets in the chart below below:

Of the $3 trillion in total Private Sector DB Plan assets, Corporate Equities (stocks) are valued at $1,085 billion ($1.08 trillion), Debt Securities are $884 billion, Misc Assets are $850 billion and Mutual Fund Shares are $444 billion.  Here are my comments on the figures above:

FIRST…. If our eyes are not glued to the TV watching CNBC, we should be able to realize that stocks are highly inflated via their extremely bloated P/E – Price to Earnings ratio.  So, that $1.08 trillion of Corporate Equities will most certainly collapse in value in the future.  This is bad news for both the poor slobs who have been paying in for decades and those retirees who were counting on that monthly income to pay for their $250,000 RV Motor Coach.

SECOND…. I find it extremely hilarious that “Debt Securities” valued at $884 billion, can be labeled as “Assets.”  Yes, I realize that U.S. Treasuries and Foreign Bonds have been assets in the past, but where we are heading… supposed assets will turn into liabilities, quite quickly.

THIRD…. $844 billion in Misc Assets are not something I would feel comfortable being invested in.  Sure, I could see possibly $20-$50 billion in Misc Assets, but $884 billion?  This reminds me of Misc chicken parts used to make McDonalds high quality Chicken Nuggets.

FOURTH…. Mutual Funds are worse than plain ole stocks… if you ask me.  Mutual Funds are claims on claims on stocks.  So, this segment of the U.S. Private Sector DB Plan is one that will turn to into vapor quicker than most when fan hits the bull excrement.

While the bloated $3 trillion Private Sector DB Plan Assets are only a small portion of the total U.S. Retirement Market, we can assume the disease has spread throughout the entire $26.1 trillion market.

Lastly, it took me a while to come to this conclusion, but I now realize why the Fed and Central Banks pushed all that PHAT QE Money into Stocks, Bonds and Real Estate.  If we are already seeing many sectors of the U.S. Retirement Market paying out more funds than are coming in… what in the living HELL does the U.S. Retirement Market look like when Stock, Bond and Real Estate values plummet?

That’s right….. it’s going to be BIG, BAD & UGLY.


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30 Comments on "Something Big, Bad And Ugly Is Taking Place In The U.S. Retirement Market"

  1. Steve, this is where I disagree with you. The stock market will continue to rise throughout the years but it’ll be totally central supported. Since the stock, bond, real estate market have completely separated from reality it will no longer reflect reality of what’s going on with the common person. All that matters is how much energy is available per human and as that drops so does your standard of living despite what some numbers in brokerage house on a computer say. The Dow stock market might hit 40,000 but you’ll be hunting dog and cat.

    • That’s right.

    • Look up the monetary system on the Isle of Jersey……because we haven’t actually tried all options

    • Two of the best examples would be the “Commonwealth Bank of Australia” under the Governor “Sir Denison Samuel King Miller” 1912 – 1923 and its founder “King O’Malley” an Australian politician who was in fact born in “Canadian” who as a boy worked for his uncle (from memory) in the “Bank of New York” and understood how banking really worked! The other bank was the “Royal Bank of Canada”.

      You will find references to both these banks in “The Web of Debt” by Ellen Hodgson Brown J.D.

  2. Steve, your expertise and dedication to truth continues to shine!!! Keep it up…we’re watching, spreading the word and continue to appreciate your hard work, it is making a difference!

    • David,

      Thanks for becoming a Patron. Really appreciate the support and glad you enjoyed the article.


  3. kulmthestatusquo | July 24, 2017 at 11:21 pm |

    The house can print as much money, chips, etc as it feels like. A casino Trump could only dream on having.

    What will happen is the retirees will be paid cheapened dollar.

    • kulmthestatusquo,

      Yes… they will continue to print money and inflate markets, but the ECONOMIC INDICATORS that gauge the regular WORKING STIFF is rolling over. So, I don’t believe they can continue just inflating assets if the market rolls over. Furthermore, the amount of debt now is CHOKING the system to death.

      I think we are going to see a SERIOUS DISLOCATION within the next 6-18 months.


      • Even if you are right, steve, I’m no longer interested. It’s been too long, too much damage has been done, and they’ll just duct tape the mess further and push it out another 10, 20 years.

        I’m divorced from it now. There’s no getting back together.

  4. OutLookingIn | July 25, 2017 at 9:22 am |

    Trillionaires everywhere!

    Just look back at the Zimbabwean stock market, where everyone was filthy rich, with one trillion Zim notes in their pockets (or wheel barrows) which they needed to buy one loaf of bread.

    The DOW at 50,000 or 100,000 and every pension fund fully funded, pensioners receiving huge increased benefits, with a dozen eggs costing 3 months payments. That’s if you find someone to sell you the eggs for worthless paper. All farms and farmland within a 150 mile radius of large urban centers, will become a dangerous wasteland. The big reset this way comes.

  5. The system is insolvent. The world adds 5.2% in debt for 2.3% in gdp growth, adding water to the energy pond until the fire goes out. When the exponential factor is there to see, even for the blind, its game over. I just wonder if there’s enough helicopter fuel for the currency droppings.

  6. There is 65 Trillions of unfounded liabilities in the United States across every State including the Federal Government…20 plus Trillions in outstanding Government Debt..Not including those States like Illinois and California and a host of other manisapalities that are at, in, or near Bankruptcy…I hope you have physical Gold, Silver, Platinum bullion or diamonds..Because the next smal resession and or Depression is going to make 1929 (1923 Germany) American Depression look like a pic nil of giant purportions….I hope you have been stashing those barter items like Survival food blankets, bullets etc. It is going to be a long ten year winter…

  7. Thanks Steve, was luck enough to join today as Patron supporter to your great site…please keep it up. regards

    • Bhavesh,

      Thank you for supporting the site by becoming a PATRON. Yes, there is plenty to write about going forward.


  8. Awesome article but I probably shouldn’t have read it right before bed!! My stomach is in knots!!!! The poor elderly and you know,I’ve told my family members who are in the market to get out and one of them said to me,”And do what with the money? Put it in the wall?Under my mattress?” I replied, “Well, at least you’ll have SOMETHING.. Isn’t something, however cheapened, better than literally nothing?That’s what you’re looking at..” Man things are going to get ugly..! THANK YOU STEVE FOR ALL OF YOUR AWESOME, AWESOME ARTICLES AND INSIGHTS……..!!!I’M CLAIMING TITLE AS YOUR BIGGEST FAN..:))

  9. CRAIG AGXIIK | July 25, 2017 at 8:26 pm |

    From AGXIIK
    Hi Steve When I read the headline I thought you were talking about me. At least the bad and f’ugly part
    My retirement plan is part of the Misc Assets and yes, it’s golden and yes, it’s a tasters choice of yellow and white—kind of like the outside the chicken McNugget and that tasty white interior made of??? I’m not sure what part of the chicken goes into that morsel but it’s most like from the rear than the breast.
    Once the stock market, mutual fund market, alternative miscellaneous market and bond markers do Tango Uniform, I plan harvest my own special assets called an SDIRA.

  10. Polymetal, interesting production results Q2/1H Gold and Silver. (sales and production).

    • Jon t,

      Thanks for sharing that. Are the production results interesting to you because everything is up except silver?


      • Silver production was down but sales in the second quarter were up.

        “Gold production for the quarter was 190 Koz, up 12% over the previous year, while
        silver production was down 6% to 6.6 Moz.”
        “Gold and silver sales for the quarter increased by 29% and 19%”

  11. Umm, the think that things can continue as they are, with the Fed printing money to prop up “the markets,” misses the point that the US does not live in a vacuum. There are other economies in the world, and they will be doing what they have to do to survive and protect themselves . . . and to this end, Jim Willie provides good info to indicate there is coming the time when the US$ as it stands will not have the exchange value and not be as accepted for international trade payments as it currently is. The US has sabotaged itself with its “offshoring” . . . for God’s sake, the US even taught the Chinese how to make commercial aircraft parts; and now we see them as a direct competitor to the US aircraft manufactures (Boeing) who thought it was so clever to offshore to China for “cheep labor”!
    Looking at the extent of loss of production (wealth) and the extent to which the consumer (posited by the charlatan money masters as being “the engine” of the US economy) can no longer go further into debt to buy what is still being produced internally, tells us that US profitability of productive enterprises is falling out of bed.
    As the actual facts of this become more and more and painfully clear to those who are still in “the markets” there will be a Niagara-like fall in the markets as the players bail out to save their skins . . .
    Added to this is the observation that the US is losing friends and support around the world due to its practice of foreign policy. It is not making friends, but creates enmity instead.
    And that, sadly, is not the way to prosperity.

    • The us controls all of the worlds central banks throught the bank of international settlements probably, The dollar system and interest rate structure force other countries act against their peoples best interests. They all work for the shareholders of the fed and other central banks and they do as they are told. How would the dollar lose exchange value. All currencies are proxy dollars?. The system will collapse by chaos caused by the disenfranchised as markets fail causing revolt against the system or/and arbitrage bypassing government.

  12. The United States IS the vacuum. Basically we vacuum up the world’s resources and export dollars. How long can this continue? Until all the resources of the world are gone.

    Decades into the future.

  13. Ken Churchill | July 28, 2017 at 10:52 am |

    Doing the math it appears that government pension funds are 59% funded and private pension plans are 86% funded.

    This is because private pension plans fall under the ERISA rules which require the sponsor to use the current bond rate of return (currently about 3.5%) and pay off unfunded liabilities over 7 years so they don’t get out of hand. And if the funding level goes below 90%, the company has to place money into the fund

    Government pension plans can choose the rate of return they want to use and most assume 7%-8% investment returns and get to pay off their unfunded liabilities over up to 30 years. ERISA also says that any pension system under 65% funded is in “critical status” which is where government plans currently reside.

    And if you applied the ERISA assumed rate of investment return rules then government pension funds would be 40% funded. And if it had to pay the unfunded liability over 7 years it would throw most local government into bankruptcy because for many agencies their pension costs would exceed their payroll.

    And not a single reporter asked about the federal pension crisis during our entire 2 year presidential election process.

    But mark my words, this is a huge crisis that is going to require huge tax increases at the federal, state and local levels and punish our children and grandchildren with drastic cuts in services that government has provided for decades.

  14. Please send me an address where I can send a cash contibution

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