The Chinese Communist Party (CCP) government is having to make immediate changes to the way that they are handling retirement for their citizens. Those immediate changes were implemented without public consultation, forcing those reaching retirement age to have to reevaluate their plans without warning. What the CCP is doing, though, is also being floated here in the U.S. to keep Social Security solvent. What does that mean for your future?

The Chinese Communist Party (CCP) rules over 1.4 billion people. That's a staggering number, four times the U.S. population, according to census data. One out of every six human beings answers to the CCP.

Of course, with that huge population and a centralized command structure to their government, it takes a massive amount of planning to try to maintain a level of stability and well being over the country (which is dangerous for many reasons, according to Nobel prize winning economist Milton Friedman).

The CCP, concerned about running out of money to provide for so many people as they age, implemented surprise changes to their retirement pensions, and you need to understand why they did it and what it means for you, since it's likely to happen here in the U.S., too.

Before we go over the details, though, it's important for you to understand the background.

Besides the problems with increasingly centralized planning (which always causes inflation, shortages, and, eventually, violence from the state to "keep the peace") which we hinted at above, there is one huge driver which caused the CCP to be concerned, and that is...

Demographics.

Now, in case you're unfamiliar with the term, demographics simply refers to the makeup of a population, such as how many are male and how many are female, how many are of each ethnicity, and the ages of the population.

And it's the age of the population that is driving the problem. Specifically, the aging of the population.

With an aging population, there are more people reaching retirement age and more of them living longer than ever before (besides Methuselah and his family, if you will).

But the number of people working isn't growing as fast as the retirement age and, in fact, in China, is actually decreasing as opposed to the growing retirement age population. Farah Master, writing for Reuters, says,

Aging populations are a global phenomenon, but the issue is particularly stark in China due to the legacy of its one-child-policy, which was in place for three decades and has exacerbated its demographic challenges.

China's number of births dropped to 9 million last year and the United Nations forecasts China's working age population will decline by nearly 40% by 2050 from 2010 if fertility rates remain at current levels.

That rate of decline in the working age population is having a staggering effect on the CCP's retirement planning in China.

But that's not the only factor causing concerns about being able to provide for retirees there. Again, from Master:

Life expectancy in China has risen to 78 years as of 2021 from about 44 in 1960 and projected to exceed 80 by 2050.

So, a shrinking workforce and a population that is living longer after retirement.

That means that it will be harder to pay retirement benefits for these workers with less money coming in (from current workers) and more going out over time as people live longer.

And that's why the CCP took the actions that we mentioned earlier.

They raised the retirement age by 3-5 years, according to Master:

China's move to raise retirement ages is a starting point to plug gaping pension deficits and bolster a shrinking workforce but more pain lies ahead as the economy slows, making further reforms urgent, say economists and demographers.

The retirement age will be raised for men to 63 years old from 60, while for women in white collar work it would be raised to 58 years from 55. For women in blue collar work it will be increased to 55 from 50.

Also, according to Paul Brandus over at MarketWatch, the CCP also implemented "a hike in the number of years workers must labor in order to qualify for a monthly pension."

So not only must workers delay retirement, they also have to work longer to earn it.

At this point, you may be forgiven for wondering what this has to do with you, so, that's where we'll go next.

See, the same problems happening in China are also happening in other parts of the world. Aging populations and fewer workers to pay into government retirement plans to support those who have retired are scaring people thinking about the futures of many countries.

The general fertility rate in the United States decreased by 3% from 2022, reaching a historic low. This marks the second consecutive year of decline, following a brief 1% increase from 2020 to 2021. From 2014 to 2020, the rate consistently decreased by 2% annually.

Remember, that decreasing fertility rate means fewer workers paying in to Social Security in the U.S. In fact, it's almost certainly worse that you thought. The chart below from the Committee for a Responsible Federal Budget matches data from the Social Security Administration's website.

The most current data from the Social Security Administration's website states that there are just 2.7 workers for every person currently receiving Social Security benefits.

Imagine you're retired and depending on Social Security... What if one of your people gets sick? Will you be eating Ramen noodles this month?

All joking aside, the Federal government anticipates the ratio of workers to people receiving Social Security benefits to decrease even further.

And, then, there's the likelihood that you'll live longer, too, just like people in China. The Social Security Administration's website shows that the percentage of people living to age 65 increased significantly between 1940 and 1990. Obviously, those people received retirement benefits throughout their longer lives.

Think about what those extended life spans will do to the Social Security "trust fund" while a shrinking workforce fails to replenish it.

It's a recipe for bankrupting the social safety net that millions of Americans will depend on in their retirement years. If you're smart, you'll make sure your personal financial future doesn't depend on the future of Social Security...

The good news is that you still have time.

The older that you are, of course, the less time that you have to get your retirement life, your own personal economy in order, but if you're reading this, then, you can take steps now to make sure that you take control of your retirement.

And that means not being passive with your retirement planning.

It also means being smart about your planning, and that smart planning includes diversifying into assets offering protection from government's poor planning. Because governments always plan poorly. (Why? Because most legislators can't see past the next election.) WE have to think long-term, and plan accordingly, on our own.

So, what should you consider diversifying into? We recommend diversifying at least a portion or your assets into something with intrinsic value (unlike paper fiat money and government promises) such as physical gold and silver and/or gold IRAs.

Taking charge of your personal economy, including planning for your retirement without betting on government programs and promises, gives you the best chance of living out your retirement years securely and with you in control.