Savings
I read an interesting article today, it was about Americans changing attitudes towards savings. Back in the 1950s, Americans saved about 5% of their wages in some manner on average. That number plummetted over the next 50 years til it reached an all time low 2 years ago at 0.4%. Yes thats right, Americans 2 years ago were saving only 4 cents out of every $100. Well guess what. That got even worse this year, as for the first time ever Americans averaged a savings of ZERO. Yes thats right, officially Americans are no longer saving. Ok the stats are a little skewed because it does not count 401K plans as they are still considered income as it has not been taxed yet. But still, zero percent! The article stated that this trend was even more disturbing because Americans were increasingly using the paper profits in their homes to buy big ticket items thus depleting their equity and any possible emergency funds that might be available there. If home prices ever go down sharply it is highly likely that it will tip America into a depression that will make the ones of 1929 and 1987 seem small. My questions to everyone is, "How much savings do you have and how does it compare to the debt that you have? If you needed cash immediately could you get it? Especially if America was in the midst of a great depresion and money stores were tight. Think about it.
posted by Unknown at 7:12 PM
2 Comments:
My parents didn't start saving for retirement until after I was out of high school, and were panicked. I learned a valuable lesson there. We are quite diversified with disposable savings, long-term savings and retirement accounts. We've got college savings for Maddy and other savings for her too.
On the other hand? Woohooo do we have debt. Thankfully not too much credit card debt, and we haven't touched the equity in the house. But we do spend more money than we probably should. I could have paid most of my student loans off by now, had I been a little smarter with extra $$.
My savings is pretty petty. I do need to work on that but as for the history of the decline in savings, I have a theory that I was discussing with someone today. I blame it on Social Security. Since it was created by FDR, people were given the notion that their lives after retirement were secure because it'd be paid for by Social Security. People see that as their retirement fund but having that fallacy in mind, they don't supplement it with savings. I'm rather happy to have my 401k and Union pension available when social security becomes a myth when I retire.
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