The US government has a $20.4 trillion retirement problem

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The US government has nowhere near enough money to pay retirees.

The credit-rating agency Moody's says state, local, and federal governments are about $7 trillion short in funding coming pension payments.

"The unfunded liabilities of the various federal employee pensions systems, covering civilian and military employee benefits, amount to about $3.5 trillion, or 20% of US GDP," a release from Moody's said Wednesday.

"Additionally, Moody's estimates that unfunded state and local government pension plan liabilities are of the same magnitude, bringing the total shortfall to 40% of GDP."

Moody's also said the public pensions were only one piece of the growing retirement problem in the US.

"The bigger challenge to the US comes from the unfunded liabilities for the Social Security and Medicare programs," the report said. "The Social Security funding gap is estimated at $13.4 trillion, or 75% of GDP, while the shortfall from the Hospital Insurance component of the Medicare program amounts $3.2 trillion, or 18% of GDP."

That means between the pension shortfall and the benefits shortfall, the US government is $20.4 trillion short in funding for retirees.

The combination of all these factors has led some, including Blackstone president and COO Tony James, to call this sort of shortfall in retirement funding the "hidden crisis" facing America.

James' point was that with corporations moving away from large pension plans and the government facing massive shortfalls in retirement funding, young people will have to rely more heavily on 401(k) plans that are not earning much.

The combination of these factors could force people to work longer or not retire at all. In fact, estimates of current retirement savings show that millennials may have to work until they're 73 years old.

This is not only an issue for retirees; Moody's says it is a huge problem for the government.

"As the stand-alone sustainability of these two programs wanes with an aging population, Social Security and Medicare will be among the primary drivers behind a sharp widening of federal budget deficits that is expected to occur after the fiscal year 2018," Steven Hess, a senior vice president for Moody's, said in the release.

With this lack of funding, it seems public employees and the US government are staring down a huge retirement problem.

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