As more and more Americans reach retirement age, an increasing number of people use their pension as their main source of income. Pensions are retirement plans that guarantee incomes to retired employees. While pensions have become more rare in the private sector, governments still usually offer them. Employers are either fully or partially responsible for funding and investing the plan that is then paid back as income in retirement. 

However, nearly every state is facing a pension shortfall. States have a combined $4.2 trillion in pension liabilities, but less than $3 trillion in assets set aside to pay for those pensions. The typical state has enough money to pay just over 70% of the pensions it owes. With such a large funding shortfall — and an estimated 10,000 people hitting the retirement age of 65 each day — states are headed for a pension crisis

To rank the severity of each state’s pension crisis, 24/7 Wall St. reviewed the average pension funding ratio — the market value of a pension fund as a share of the total benefits owed to current or retired public employees — for all 50 states as of 2018 with data from nongovernmental organization The Pew Charitable Trusts.

Only one state has fully funded pensions, based on 2018 data, the most recent year of available data. Six other states have over 90% of all pensions funded, yet four states do not have the money to meet even half of their pensions obligations. The funding gap is anywhere from $1.1 billion to $184 billion. 

Pension funding shortfalls have long been an issue, and they have only gotten more severe in 2020. Several states asked for federal help to fund their pensions but were rebuffed as Congress declined to provide aid for issues other than  COVID-19-related relief. Congress has yet to pass a second COVID-19 stimulus bill after passing one earlier this year.

This pension funding shortfall could potentially affect millions of Americans — 13.1% of all workers in the country are employed by state and local governments. Like those in nearly every other line of work, government employees have been hit hard by the pandemic. The number of government workers declined by 3.7% nationwide from Sept. 2019 to Sept. 2020. These are the cities with the worst COVID-29 unemployment crisis right now.

Click here to see every state’s pension crisis ranked.
Click here to read our detailed methodology.