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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There are three sources of continuing pension funds.
1. Some people die before they take out what they put in.
2. There are more people working and putting into the pension fund than pensioners taking out from it, due to population growth.
3. That huge surplus of cash allows for investments, which allows for more growth.
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