An editorial exploration of underfunded pensions and how RESO Your Finances reframes retirement planning through resilient, multi pillar design.
A Quiet Shift In American Retirement Planning
For decades, many Americans—particularly those in the public and corporate sectors—have structured retirement around a familiar assumption: a pension, supported by Social Security, would provide long-term security. These systems were designed to deliver stability, predictability, and peace of mind after a lifetime of work. Today, that assumption is increasingly under strain.
Despite periods of market recovery, pension systems across the United States continue to face structural underfunding, demographic pressure, and rising long-term obligations. At the same time, Social Security’s funding trajectory highlights the growing gap between what is scheduled and what may ultimately be payable without reform.
The result is not an imminent collapse—but a progressive weakening of certainty. This shift has direct implications for how Americans must now approach retirement planning.
The Structural Challenge Behind Underfunded Pensions
Public pension plans promise future income based on salary history and years of service. To meet those obligations, plans must accumulate sufficient assets over decades. When projected liabilities exceed invested assets, a pension becomes underfunded.
Recent national assessments show that the average state pension funded ratios hover around 70–75%, meaning roughly 25–30 cents of every promised dollar remains unfunded. Estimated unfunded pension liabilities exceed one trillion dollars, even after years of market expansion.
While some plans improve in strong market years, many remain structurally fragile. Longer life expectancy, expanding retiree populations, and rising healthcare and benefit costs continue to pressure pension systems. When plans fall behind their obligations, the adjustments tend to follow familiar paths: reduced cost-of-living increases, higher employee contributions, later retirement ages, benefit restructuring for new workers, and increasing strain on government budgets. Even where current benefits are legally protected, future benefits grow less predictable.
Social Security As A Base, Not A Solution
Social Security remains one of the most important income sources for retirees, but it was never intended to stand alone. Current projections indicate that without reform, Social Security’s trust fund reserves face depletion in the early 2030s, after which scheduled benefits would need to be reduced to match incoming revenue. The program is unlikely to disappear, yet its ability to fully support retirement lifestyles continues to narrow.
Taken together, underfunded pensions and constrained Social Security point to a clear conclusion: institutional income alone is no longer sufficient for most long-term retirement plans. This is not a failure of the system. It is a signal that the system was never meant to carry the full weight by itself.
A Global Perspective That Changes The Conversation
What makes RESO Your Finances distinct is its refusal to view this challenge as uniquely American. Instead, the firm looks abroad to systems that have demonstrated long-term stability under similar pressures.
Switzerland offers one of the most cited examples. Its retirement framework is built on three coordinated pillars. A public foundation ensures basic living security. Occupational pensions support lifestyle continuity. Privately owned capital provides flexibility, tax efficiency, and individual control. No single pillar is expected to succeed alone. Strength comes from balance.
The United States already operates versions of the first two pillars through Social Security and employer-based retirement plans. Where many strategies fall short is in the deliberate construction of the third pillar. This is where RESO focuses its work.
The Swiss Framework: Why the World’s Most Stable Systems Don’t Rely on One Pillar
In Switzerland, often cited among the world’s most financially secure retirement systems, retirement planning has long been approached not as a single benefit promise, but as a nationally engineered financial structure. Rather than concentrating responsibility in one institution, the Swiss system was deliberately built to distribute retirement security across multiple, coordinated components.
At the core of this approach is the legally defined three-pillar model, a framework designed to balance public responsibility, employer participation, and individual ownership. The first pillar provides a universal social foundation intended to cover basic living needs, the Swiss social security. The second pillar, made up of occupational pension plans, is structured to help preserve lifestyle continuity throughout retirement. The third pillar is where the Swiss model becomes distinctly forward-looking: privately owned, individually controlled capital designed to provide flexibility, tax efficiency, and long-term reinforcement beyond institutional systems.
What distinguishes this structure is not the strength of any single pillar, but the way they operate together. The Swiss system assumes from the outset that no one source of income should be expected to carry the full financial burden of retirement. Its resilience comes from coordination, diversification, and individual participation.
The United States already operates functional equivalents of the first two pillars through Social Security and employer-sponsored retirement plans. Where many American retirement strategies remain structurally incomplete is in the systematic development of the third pillar—the intentional construction of personal, portable, and tax-diversified assets that are not dependent on government funding ratios, political cycles, or employer solvency.
Building A Personal Third Pillar With Purpose
In practice, the third pillar is not a single account or product. It is a strategy grounded in diversification, control, and adaptability. RESO frequently works with tools such as Roth-based accounts and properly structured life insurance solutions, always emphasizing design, assumptions, and long-term oversight.
A Roth IRA, for example, can function as a tax-free income lever in retirement. When pensions and traditional accounts create taxable pressure, Roth withdrawals may help manage lifetime tax exposure and preserve net spending power.
For higher-income individuals who already maximize qualified plans, certain insurance-based structures may offer additional flexibility and protection when designed correctly. These tools require ongoing management and realistic expectations, but they can serve as private reserves that complement institutional income. However, these methods should be used with caution and in conjunction with professional guidance to avoid potential missteps.
What matters most is not the tool itself, but how it integrates into the overall system..
A New Definition Of Retirement Confidence
The central question has quietly changed. It is no longer simply whether a pension will be sufficient. It is how that pension is being supported, balanced, and reinforced.
With public pension funding uneven and long-term Social Security reform still unresolved, retirement security is steadily shifting away from institutional dependence toward individual architecture. The responsibility increasingly lies in how effectively people structure their own supplemental systems around the foundations already in place.
The most durable retirement strategies of the coming decades are unlikely to rely on any single account, formula, or withdrawal methodology. Instead, they will be constructed from multiple, coordinated pillars, deliberately designed to adapt to market cycles, shifting tax environments, and longer life expectancies. This evolution—from passive reliance to active retirement engineering—is emerging as one of the defining features of modern financial planning. It is also the core philosophy behind the Swiss-inspired framework applied by RESO: treating retirement not as a product outcome, but as a long-term financial structure.
Learn More About A Systems Based Approach To Retirement
RESO Your Finances works with individuals who want to understand how their pensions, Social Security, and personal capital can function together as a cohesive retirement system. To explore the firm’s Swiss inspired approach to retirement planning, visit resoyourfinances.com. You can also connect with RESO Your Finances on LinkedIn, follow insights on Facebook, watch educational content on YouTube, and review client experiences on TrustPilot through the firm’s official channels.
Disclaimer:
The information provided in this article is intended for informational purposes only and should not be construed as financial or investment advice. The strategies and tools discussed, including Roth IRAs and life insurance, may not be suitable for everyone and should be considered in light of individual circumstances. Always consult with a qualified financial advisor or retirement planner before making any decisions related to retirement planning or financial products. The views expressed in this article are those of the author and are not intended as a guarantee of future performance.
