The core problem facing the German Chancellor is the unsustainable financial structure of the country's social security, driven by a shrinking working-age population and the simultaneous retirement of the large baby-boomer generation. Germany operates a pay-as-you-go (PAYG) pension system, meaning current workers fund current retirees. This model worked when the worker-to-pensioner ratio was high (e.g., over seven-to-one in the 1950s), but it is now collapsing as the ratio approaches two workers supporting every pensioner. This demographic imbalance creates a massive fiscal gap. Proposals to simply maintain current pension levels (e.g., guaranteeing 48% of the average salary) are projected to cost the federal budget an additional €120 billion by 2040, placing an immense, and arguably unfair, burden on younger generations who must finance these costs through rising contributions, taxes, or sovereign debt.