The current economic mess in the developed world is easy to explain and hard to fix.

This is a demand-driven downturn, where aging populations choose to save more of what they earn, take on less debt, and generally rotate to a risk-averse world view.

The change isn't new. It happens to almost all of us as we get older.

The difference this time is that the aging generation is so big compared to other generations, that their actions take on outsized importance.

There aren't enough young people to drive our economies higher. Empty-nesters don't spend as much because they want to pad their income in retirement. State-sponsored pension programs aren't typically generous, so this makes sense. As these people spend less, domestic consumption slows down, dragging GDP with it.

While this storyline applies to many countries, one of the hardest hit is China.

Its working-age population is shrinking because of the one-child policy from the late 1970s, and aging workers are fearful that they will be destitute in retirement.

They have good reason to be scared.

The Chinese Social Security program is set up nationally, but funded and administered in the provinces.

Employees of private companies are required to contribute 8% of their pay and their employers kick in as well. After a minimum of 15 years of contributions, workers can retire at age 60 for men and 55 for women and start claiming their benefits.

What they will receive differs by province and location (urban versus rural), but a typical urban private sector employee is expected to receive 40% of his salary.

That might sound alright, but it puts many retirees under the poverty threshold.

In addition to worrying about how much they receive, like retirees around the world relying on state programs, aging Chinese must also worry about whether or not their funds even exist.

With several hundred billion dollars in surplus, the excess pension funds are supposed to be invested in a mix of mostly bonds, with a little bit of equity as well.