Permit me some really rough mathematics.

In my introductory course to basic personal finance and investing, one of the first things I have my students do is go to this website and calculate how much they need to save for retirement.  It’s a good exercise for everybody to go through, but the primary point is that (if you tinker with the calculator) you’ll realize each person needs roughly $1 million in savings to retire.

With 6.5 billion people in the world that ads up to $6.5 quadrillion (the number after trillion) in required savings to invest.

Now, I’ll grant you “retirement planning” and things like 401k’s and RRSP’s are really more of a western phenomenon and most people in 2nd and 3rd world countries don’t have retirement plans, so let’s just say the roughly 1 billion people in countries where they do have some kind of retirement program need to save up for retirement.

That brings the total amount of required savings down to $1 quadrillion.

Just one problem.

There isn’t $1 quadrillion worth of stocks or bonds in the entire world.  Matter of fact, according to the World Federation of Exchanges, there’s only about $55 trillion in equity and $82 trillion in bonds, leaving us with $137 trillion in securities, only 14% of the total amount required to finance the retirements of 1 billion people (it is duly noted here there are other securities, however, bar commodities, things like mutual funds and ETF’s are merely compositions of stocks and bonds.  I admit we could throw in the commodities market and REIT’s, but you’ll soon see the point I’m trying to make).

There are some other problems as well.

First, the majority of the $137 trillion in securities is owned by the richer classes.  It is not equally spread out across the 1 billion westerners.  So the average 401k schmoe is less likely to have the $1 million in his account.

Second, though primarily held by 1st world nations, some of that $137 trillion IS held by 2nd and 3rd world countries.  In other words, the above optimistically assumes all the stocks of the Shanghai stock exchange are held by westerners solely for their precious little 401k plans which simply is not the case (heck, foreigners hold most of our debt anyway).  

Third, the bond market has a ton of debt that is, frankly, never going to be paid back and be defaulted upon.  $16 trillion (intra government holdings duly noted) alone of which is the US federal government and roughly an equivalent amount in those kick-the-can-down-the-road socialist utopias in Europe that are currently already defaulting.

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http://captaincapitalism.blogspot.com/2013/05/the-mathematical-impossibility-of.html