Image: Broken nest egg © Deborah Harrison, Photographer's Choice, Getty Images

Once upon a time, people stopped working at age 65 and enjoyed years of golf and grandchildren funded by a reliable monthly income from corporate pension and health care benefits supplemented by government health care and Social Security. In 2012, that fairy tale has become a joke. Here are six reasons you'll never retire:

1. Corporate pension slashed

There are two types of corporate pension funds: defined benefit and defined contribution, such as 401ks. Defined benefit is the formerly common corporate practice of companies paying you a fixed amount every month after you retire; defined contribution means that a company contributes a specific amount to your retirement fund.

A 2010 survey by consulting firm Towers Watson found that between 1998 and 2010, the proportion of Fortune 100 companies offering defined-benefit plans fell from 67% to 17%, while defined-contribution plans rose from 10% to 58%.

Companies did this to cut their costs, and unless you have amazing luck investing, the defined-contribution plans will deliver less income after you retire.

2. Dropping income

Meanwhile, incomes that might go into savings to make up for that pension drop are way down on an inflation-adjusted basis. A September 2011 Census Bureau report revealed that a typical U.S. family became poorer between 2000 and 2010 -- the first decadelong income decline in at least a half-century. Specifically, median household income fell 2.3% to $49,445 in 2010 and has dropped 7% since 2000 after adjusting for inflation -- and income was the lowest since 1996.

3. Higher child care expenses due to rise in 2-income families

Despite the rise of two-income couples, families are only treading water. According to the Census Bureau, between 1950 and 2008, the proportion of one-earner families plummeted from 63.4% to 16.9%, while the share of American families with two earners soared from 20.4% to 42.4%.

While this arrangement offers financial benefits, it also adds to parental stress and boosts child care expenses for many families. For example, in 2011, fees in licensed centers ranged from as high as $14,050 a year for a 4-year-old child to $18,200 a year for an infant, according to the National Association of Child Care Resource & Referral Agencies (.pdf file). Those figures are based on an average of 35 hours of child care per week.

4. Collapsing investment returns

As the number of people with defined-contribution plans has increased, the opportunities to invest them at a meaningful rate of return -- at least 8% a year -- have evaporated. For example, stocks have earned slightly more than 2% a year in the past decade, while the average annual return of the Standard & Poor's 500 Index from 2002 to 2012 has been 1.8%.

And fixed-income investments are even less attractive -- a 10-year Treasury note, for example, was recently paying 1.8%. And to earn a mere 2.9%, you need to park your money for 30 years in a U.S. Treasury bond.

In short, lower corporate contributions and a shift in investment responsibility from the company to the employee have accompanied a range of investment options with annual returns that are at least 6% a year too low.

5. Insufficient savings

Although estimates vary, a rule of thumb is that you need 60% of your pre-retirement income to live comfortably after you retire. If you make $100,000 a year before retiring, you'll need $60,000 a year by that rule.

If you have $10 million saved up, and it yields the typical money market rate of about 0.5%, that means $50,000 a year in income. If you supplement that with Social Security -- the average monthly Social Security benefit for retired workers in December 2010 was $1,175.50 -- you could be fine. Naturally, the more your savings can yield, the less you need to save to reach that target.

But how many of you will really have that much saved up? Very few. According to the Employee Benefits Research Institute, 17% had more than $250,000 saved up in 2011. The report doesn't say what percentage had more than $1 million, but 60% of those surveyed reported having saved less than $50,000. In short, most Americans will not have enough money for retirement.

6. Inheritance too small

If you don't have enough money saved up on which to retire, you have three options: work until you die, inherit enough to retire on or retire with insufficient money to pay your bills.

For example, 78 million baby boomers -- born between 1945 and 1965 -- are expected to inherit $8.4 trillion (including $2.4 million that has already been received), according to Boston College's Center for Retirement.

And that's not all . . .

Even if you save up enough money, unexpected expenses could ruin your well-prepared plans:

  • What if you get sick and need expensive medical treatment that's not completely covered by insurance?
  • What if you have unpaid debts?
  • What if there's a financial crisis that slashes the value of your retirement savings?

Sure, there's a chance that you'll enjoy an idyllic retirement. But for most people, retirement is dead.

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