The Hole in the Bucket (Americans Are Saving Less And Less)

Washington Monthly ^ | July/Aug 2012 | Phillip Longman

[Sir Napsalot]

Never before in history has the great American middle class obsessed so much over financial planning as during the last forty years or so. ...

And yet here we are today. According to a recent study by the Employee Benefits Research Institute, fully 44 percent of Baby Boomers and Gen-Xers lack the savings and pension coverage needed to meet basic retirement-age expenses, even assuming no future cuts in Social Security or Medicare, employer-provided benefits, or home prices. Most Americans approaching retirement age don’t have a 401(k) or other retirement account. Among the minority who do, the median balance in 2009 was just $69,127. Meanwhile, the college students who graduated in 2011 started off their adult lives encumbered by an average $25,000 in student loans.

What went wrong? We can all come up with scapegoats, of course. It’s common to hear, for example, that America became a nation of impulse shoppers and spendthrifts over the last generation. But like a lot of conventional wisdom, this consensus isn’t just wrong, it’s mean. The average American household actually spends significantly less on clothes, food, appliances, and household furnishings than did its counterpart of a generation ago. There is, however, a deeper story to tell—one that is still largely unacknowledged in our political debates.

[utahagen]

Saving has always been more difficult than spending, but it's especially tough when you wonder if the U.S government will end up seizing personal bank accounts in a decade or so because there's no other sources of revenue left for the government.

[chesley]

Perhqps one reason that people are saving less and less is that over the last few decades the government has sytematically and continuously attempted to either tax or inflate their savings away.

To many people there seems no point to it.

[EGPWS]

What went wrong?

Gee, certainly not an oppressive government soaking the productive dry of assets to achieve the votes of those who are not productive.

[EGPWS]

Saving has always been more difficult than spending, but it's especially tough when you wonder if the U.S government will end up seizing personal bank accounts in a decade or so because there's no other sources of revenue left for the government.

I predict that eventually government will tax a retirement tax after retirement just to achieve more funds to feed the beast.

[Sir Napsalot]

Not in the least, Americans’ expectation of ‘cradle to grave gubmint generousity’ were misled by our public education and our betters.

[N. Theknow]

Well, let's see....why in the world am I saving less these days?

Could it be because I have...

Two houses worth about 60% less than what they were worth in January 2009.

A 401K which is worth less than it was in January of 2009.

A commercial property which is worth about 75% less than it was in January 2009.

A small business(obviously I didn't build it so why even mention it) which is worth about 80% less than it was in January 2009.

Could there be a connection?

[nascarnation]

At the time, Social Security was paying out benefits to retirees that exceeded the value of their contributions by between $250,000 and $300,000 in today’s money

I've been trashed on FR for mentioning this, but I believe it's absolutely true.

[Freddd]

‘balance in 2009 was just $69,127’—

Why not put out current info?
2011 or even 2012?

Those that had the ‘balance’ of $69,127 in 2009 don’t have it anymore in this ‘age of Obama’.

So surfice it to say that ‘balance is just’- half now??? Those that didn’t lose their home, or job that is?!

[nascarnation]

Many also, in effect, wound up using credit card debt to finance their stock market and real estate speculations—as when, for example, people put money into mutual funds or an upgraded kitchen and then found they needed to use their credit cards to cover routine household expenses, like gas, groceries, or the rising cost of health insurance..

Sounds just like the Fedgov, doesn't it? Spending $1.40 for every $1.00 in revenue.

[lacrew]

Right off the top, medicare, ss, state tax, and fed tax take 17% of my inclome.

Add to that another 5% for property tax, I’m out 22% of my income.

Around 21% of my spending is subject to 9% sales tax...another 2% gone. So now I’m out 24%.

I spend 1.5% of my income of gas taxes...now I’m out 25.5%.

Tag taxes, taxes on the power bill, etc....at least 1% of my income...so 26.5% gone, right out of the gate.

I save 6%. If the various government entities with their hands in my pockets would reduce my taxes by 23%, I could DOUBLE my saving.

This is not by accident - tax the middle class to the point that saving money becomes difficult; and, they will eventually have to go crawling to government for help. And, no generational wealth. Our subsequent generations will start will no family money, and be complete serfs to the benevelent government.

[GenXteacher]

One of the bad things about low interest rates- a disincentive to save. Combine that with a situation where the government is trying to re-inflate the economy with worthless paper, aka “qualitative easing”, and you wind up with virtually no saving.

[American in Israel]

Without the dollar linked to the gold standard, saving for retirement is like trying to fill a leaky bucket. I shovel money in the bank and the government prints it out the back.

Gold was 19 bucks an ounce in the last depression, they have printed so much money its 1500 this depresion.

Just think of saving an ounce of gold a month worth of cash in the bank for retirement and when its time to spend it it you have to trade six and a half years worth of savings for one months worth of cash.

That is EXACTLY what was done to us BEFORE OBummer. He, in just three years wiped away one third of everyones retirement with his handy dandy printing presses.

[mjp]

Keynesian libtards consider an assault on savings to be a good policy to help increase the employment rate.They believe that budget deficits will help to adsorb the excess saving that allegedly would otherwise take place at full employment.The deficit according to the Keynesians, serves as an additional outlet for saving and thus reduces the amount flowing through to net investment.With a large enough deficit ague the Keynesians, there can be full employment.

Since the deficits have to be paid for with inflation, confiscatory taxation, or government borrowing, which are also assaults on saving, there is no mystery as to what is causing low savings.

[Max in Utah]

Don’t forget the big increases in food and fuel costs (which are conveniently not included in calculations of the inflation rate).