Friday, April 21, 2006

Our savings rate is less than 0%: The whole truth?

Recently, there have been dire headlines in the newspapers regarding our consumerist tendencies in this country. According to these articles, we are a country addicted to debt, our savings rate is negative for the first time since the depression; i.e. as a nation... we're in some deep s!@# and our children will have to pay the consequences via higher taxes, more sacrifices.

Much of these dire predictions do give us a snapshot of where we stand in this country as a whole; however, this isn't the entire truth. For example, my savings rate is >10% (and many of you that read finance blogs likely save more than you spend); I don't think I'm necessarily unique in this aspect. In fact, many Gen X and Gen Yers are not relying on social security for their retirement and are making preparations now in the form of contributing to 401ks or IRAs. Is there a subset of super-savers that has reacted against the current perception of our generation being a generation of materialism and indebtedness?

There is an interesting article in the NY Times that discusses this. It seems that within our generation (age 20-40), there is a growing disparity in savings rate between those with high incomes and those with lower incomes. High income people are contributing more to retirement than ever before whereas those with lower incomes continue to struggle and will necessarily depend on social security and/or pension plans during their golden years. The larger questions are (1) how will this problem be fixed? and (2) is it fair to burden those that have done a good job at saving in the form of higher taxes to compensate those that need assistance? What then is the motivation to save if you get "penalized" for doing so? Where do you fit in? Super-saver, saver, breaking-even, or so far in debt it doesn't even matter anymore?
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2 Comments:

Blogger inagm said...

I'd like to be a super-saver but there are just so many things to buy! haha

Anyways, I don't think I do terribly great research on stocks, but you can check back for more of my reasoning behind stock picks. (not terribly original reasoning either, but hey if everyone else wants to buy the stock I want to buy, that's good)

6:52 PM, April 21, 2006  
Blogger Jonezez said...

I agree... there are so many things to buy! Hence my links to Keeping Up With Jonez on the R side. All websites that have led to spending of some sort.

12:07 PM, April 22, 2006  

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