If you pay into a pension for so many years, but end up living a long time then you will have likely gone through the principal as well as any interest earned. How do retirement systems fund this if you’ve drawn more than you’ve saved over the years?
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A few factors… Funds are invested in higher return investments than just savings account interest. Pension fund managers will invest in a mix of stock, bonds, even financing construction projects (provide jobs for union members and investment returns = win/win). Secondly, while some live a long time, others die before they collect any or much pension. They use calculations of average lifespan to determine projected funding needs. There are new members paying in to the pension while older ones draw off it.
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