How Blockchain and Digital Assets will solve America’s retirement problem

Social security is in some serious trouble

Blockchain implementation is slowly transforming the entire financial industry, retirement is no exception. A milestone for most adults, retirement is met with a mix of excitement and adventure, but too often anxiety and regret. The ability to generate income with advancing age is limited, and no one wants to be a burden on their family or their community.

In 2022, there exist Social Security programs, 401(k)’s and diversified savings vehicles designed to help individuals prepare for their retirement. Unfortunately, successful instances where these programs have achieved their intended goal are increasingly becoming rare.

The Pension System Is In Trouble

The large reason why many of our parents can afford to leave their careers and put their feet up for a well deserved retirement is the pension system. But the days of working for one company and being rewarded with a guaranteed lifelong pension are over.

Although pensions still exist, an increasing number of companies are struggling to stay true to the promises they made to their former employees. In a moment of particularly harsh economic conditions, the problem is becoming a real issue.

A large portion, 40% of older Americans, rely only on Social Security income in retirement. Their situation is becoming precarious. Funds tasked with paying monthly distributions are struggling to make good on their projected return promises, many of them suffering as obligations rise and funds erode. The risks of default are great, not only to our hard working parents but also to the whole economy.

Known as the retirement savings gap, the amount of money in pension funds does not meet their outstanding liabilities to pensioners, and this deficit is growing exponentially. It is only a matter of time before companies cannot afford to continue making pension payments. This will have disastrous knock on effects.

Government pension plans are not safe either: The U.S. Postal Service, for example, failed to deliver as much as $34 billion to its pension fund from 2012 through 2016.

Unfunded state pension liabilities have climbed to $8.28 trillion, or nearly $25,000 for every person in the United States, according to a new report from the American Legislative Exchange Council.

The reasons for this mess are endless but two prominent examples that stick out are a serious lack of transparency at all stages throughout the pension-managing process and poor management itself. The executives and HR departments tasked with picking a pension plan struggle to understand where the fund is invested, how it is performing, and if it is a right fit for the company needs. Accordingly, it’s nearly impossible to identify a fund that will act in good faith when distributions are due.

Blockchain Is The Savior

Blockchain, a revolutionary computer-based record-keeping technology that functions as a digital ledger, comes at a crucial time and may represent the savior of pensions everywhere, thanks to the unique ways that it’s being applied by ambitious projects in the fledgling industry.

According to Conor Walsh, who Cofounded, a blockchain-powered savings platform where he serves as COO, the world’s pension system is failing for the following reasons:

  1. Changing population demographics — fewer young workers supporting more pensioners
  2. Low mobility — Most pension plans are attached to a specific employer, career, or place of residence
  3. A lack of transparency and control
  4. The long history of bad actors corrupting the system

“We are developing web-3 based software and a platform that will solve these problems,” says Conor, “through a transparent savings account that increases user activity, aligns with community interest, reduces friction, and incentivizes prudent saving strategies through rewards systems. We are revolutionizing how future generations will save for retirement.”

Blockchain addresses these four challenges by working on a shared decentralized ledger. Through providing crucial information relevant to all stakeholders in a single ecosystem, savers are now able to audit the funds, assets, investment opportunities and vehicles they are considering. Given the permanence of record, blockchain technology finally provides accountability to the retirement system through the ability to punish bad actors or institutions not meeting their promised projections.

Dorado, led by Conor and his team, connects individuals, experts, opportunities and decentralized finance in one greatly improved ecosystem. With an incentivized system for providing prudent savings strategies, and positive community contributions based on performance and behavior, the Dorado Token motivates the participation in a system where all aspects of a holistic retirement company are open to the customer base.

Exciting Millennials with Cryptocurrency

Digital assets and blockchain can solve another problem as well. Efforts by a generation of millennials to save for retirement have been waning, largely due rising inflation and debt levels, stagnant wages and a distrust for the financial system. Millennials are avoiding to look at their financial position in the future for fear of what they’ll see, but digital assets and the enthusiasm for this asset class adds optimism to the picture.

Blockchain technology is creating a more-accessible and enticing ecosystem for retirement planning that include cryptocurrency investments. These appeal to a younger crowd that is in urgent need of starting to save for retirement.

Blockchain and Web-3 brings a reinvigorated attitude to savings. By leveraging the three pillars of the blockchain and Web-3 according to Conor “Transparency, Community, Education, we are seeing a huge amount of growing interest in the space, people wanting to learn, contribute and become involved with companies and leaders they trust.” By adding a tokenized rewards strategy, aims to only increase that involvement and incentivize users to save more.

In conclusion

Pensions and 401(k)’s are large lumps of money that require immense supervision, management, and input. Blockchain and digital asset structures are already showing how it will solve the world’s most enduring problems. With the greatest transition in financial history taking place, a reinvigorated saver is born. One that demands transparency, efficiency and a community. It’s time to change how we think about retirement funding and who we trust to manage this future. The old systems have not worked, blockchain is the savior.