These days, a pension just isn't what it used to be.
For generations, a defined benefit pension—a fixed monthly check for life—provided an ironclad promise of a secure income for millions of retired American workers. But today, that promise has been badly corroded by decades of underfunding that have undermined what was one of the cornerstones of the American dream.
The safety net that millions of retirees spent decades working toward has been fraying for some time. The Great Recession, and the market collapse that wiped out trillions of dollars of investment wealth, weakened the pension system further, though some of the damage has been repaired since the stock market rebounded and the economic recovery took hold.
Hundreds of billions of dollars in defined benefits are still paid out every year to retirees. State and local public pension benefit payments reached $242.9 billion in 2013, according to the most recent Annual Survey of Public Pensions. And a Towers Watson study of more than 400 major companies that sponsor U.S. defined benefit plans estimated they paid out nearly $97 billion in benefit payments last year, and another $8.6 billion went toward lump sum payments and annuities.
But that's nothing compared to the private employers' projected benefit obligations last year, which climbed 15 percent from the previous year to a whopping $1.75 trillion, while plan assets grew by only 3 percent.
Disparities like that help explain why so many pensions are in peril. Simply put: Obligations have outpaced fund contributions and growth for private and public plans. That means that even workers who have paid into pensions for several years may not get the level of benefits they expect. And many younger employees may never have an opportunity to participate in a pension at all.
The result is that, unlike past generations of Americans, many workers today bear the brunt of the investment risk that underpins their hopes of income security once they are no longer able to work.
"Every time they try nibbling at it, it just makes it that much harder."
In 1975, some 88 percent of private sector workers and 98 percent of state and local sector workers were covered by defined benefit plans, according to a 2007 report by the researchers at the Center for Retirement Research at Boston College. By 2011, fewer than 1 in 5 private industry employees was covered by a pension that paid a guaranteed monthly check, according to the Labor Department.
That historic shift has been blamed by critics for an estimated deficit in retirement savings of more than $4 trillion for U.S. households where the breadwinner is between ages 25 and 64, according to Employee Benefits Research Institute.
"You have this hole in what private sector workers have for retirement. We're coming up on this place where all these people are not going to be able to retire," said Monique Morrissey, a researcher at the liberal Economic Policy Institute.
More from CNBC:Is the 401(k) experiment a failure?
That shift away from a guaranteed pension check has been slower to take hold among public sector workers, where some 83 percent still have access to a pension that promises to pay monthly retirement income for life after a career of service. But that's changing.
Faced with rising health costs and retirees living longer than expected, many state and local governments are failing to keep up with the annual payments. A CNBC analysis of financial data for 150 state and local pension plans collected by Boston College's research center found that 91 had set aside less than 80 percent of the money needed to meet current and future obligations to retirees. Only six were fully funded.
For retirees like David Jolly, 90, that's mean getting by with a little less every year.
Jolly, who retired in 1986 as public works director for Island County, Wash., now lives with his wife on a combined monthly income of $1,888 from his state pension and Social Security. "Every time they try nibbling at it, it just makes it that much harder," he said. "They don't realize what the cost of living of older people is. ... It just keeps going up and the retirement pay just doesn't."
More from CNBC: Rough road to retirement for many Americans
To close the pension funding gap, many state and local governments have also cut access to defined benefit pensions for new hires or increased contributions and minimum retirement age for active workers. "New employees can expect to work longer and save more to reach the benefit level of previously hired employees," according to asurvey by the retirement administrators association.
While closing plans to new members may reduce benefit liabilities decades from now, it also cuts into the contributions from active workers to support retirees. For over a decade, the ratio of active workers to retirees has been falling, placing an added strain on the public pension system.
For workers and retirees in the private sector, where defined benefit plans are much less common, funding levels are generally in better shape.
Rising investment returns since the financial collapse of 2008 helped boost funding levels for private industry plans in 2013 to 88 percent of their liabilities, according to a survey of the latest available data by pension fund consultant Milliman. But that still left the 100 largest companies surveyed with a combined pension plan funding deficit of $193 billion.
More from CNBC: Pensions or potholes? Congress chooses potholes
The pension funding shortfall is even worse for a handful of so-called multi-employer pension plans, which typically cover smaller companies and unions and face a different set of financial challenges. Declining union enrollments, for example, mean there are fewer active workers to cover the cost benefits for retirees, many of whom are living longer than expected than when these plans were established.
Multi-employer plans also face the added burden of their pooled pension liabilities. When one member of the plan fails to keep up with contributions, for example, the burden on the other members increases.
About a quarter of the roughly 40 million workers who participate in a traditional "defined benefit" plan—those that pay retirees a guaranteed check every month—are covered by these multi-employer plans, according to the Bureau of Labor Statistics. In the last four years, the Labor Department has notified workers in more than 600 of these plans that their plans are in "critical or endangered status."
More from CNBC: Here's one way not to fall short on retirement $$
Last year, the Pension Benefit Guaranty Corporation, the government insurance fund for pension plans that go bust, reported that its program backing multi-employer plans was $5 billion in the red. It projected that unless Congress acted, there was about a 35 percent probability its assets would be exhausted by 2022 and about a 90 percent probability by 2032. (Single-employer pension plans are covered by a separate program that is on a much more solid financial footing.)
After funding shortfalls threatened the solvency of the governments' insurance backstop for multi-employer pension plans, Congress eased the rules allowing plan administrators to cut benefits last year.Proponents of the proposed pension guaranty corporation reforms argue that they will help prevent more multi-employer plans from going under and that retirees are better off with smaller monthly payments than none at all.
That's something beneficiaries of private and public pensions are hearing a lot these days.