TITLE

To Save or Not to Save, That Is the Question

PUB. DATE
May 1999
SOURCE
Journal of Financial Planning;May99, Vol. 12 Issue 5, p20
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article comments on the issue of low personal savings rate in the U.S. Debate is heating up regarding the importance--or nonimportance--of the dismally low personal savings rate in the U.S. Several economists are stepping forward to argue that it's meaningless, for a variety of reasons. Some say we need to look at the national savings rate--the aggregate of personal, corporate and government savings, which has been on the rise. Others point out that the savings rate omits money paid into Social Security and it omits investment gains, which is where the nation's wealth has been increasing. Thus, consumers can afford to spend all their income because their overall wealth is still growing. After all, despite our supposedly abysmal savings rate compared with nations like Japan, it's the U.S. economy that is the envy of the world. On the other hand, only about half of the nation's households hold stocks and many workers aren't covered by pension plans. So, in fact, their dismal savings rate is just that--dismal. Many live paycheck to paycheck, saving nothing and failing to build net worth. Personal bankruptcies are at an all-time high at a time when the economy and employment have rarely been better, which suggests the consumer-driven economy is driven by debt. Sounds like an issue planners ought to step into.
ACCESSION #
1877449

 

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