If you are the average America, the answer is zippo.
The government released statistics today that the average American's savings rate in 2006 was -1 percent. That's right, a negative number. How can that be, you might ask? Well apparently, loans against 401k plans, withdrawles from savings, home equity loans and the like outpaced contributions into such accounts.
Think about that. For every person that put $10,000 into savings last year, someone else took out $10,100. If $18 billion was going into mutual funds every month (primarily in 401k plans), $18,180,000,000 was coming out.
The negative rate in 2006 followed a negative rate in 2005. It is the only two-year period in recorded history that such a thing occurred, the other being 1933-34. Remember what was going on then? Oh yeah, the Great Depression -- the worst economic period in modern US history. 25 percent unemployment or more, farms going belly-up out West -- general disaster.
What about 2006? Unemployment is low, the stock market has been good, the economy is expanding. What is our excuse? You and I both know what it is -- we don't save because we don't want to. As a society, we have devalued savings and elevated consumerism. Sunday's Super Bowl is a prime example. Tickets are going for several thousand dollars a pop. The networks pay hundreds of millions to broadcast the game, and then charge millions per minute for advertising. Advertisers pony up because they believe that their money will be recouped the next time you go shopping for a $40,000 car, a disposable razor with 28 blades, or the best tasting beer on the planet.
With nearly 80 million baby boomers headed for retirement, and Gen X'ers saving squat, the numbers are gloomy. Most people are not more than a few months away from bankruptcy, or borrowing from a 401k.
My personal savings rate for 2006 was 4 percent. If you add in the gains from investments, that number goes up to 18 percent. But, you can subtract 7 percent that was withdrawn from savings to pay for life. So, we were up. That means that one of you out there was down ... way down. Maybe next year we will reverse positions. I'm not bragging ... I need to be saving more too.
Sounds like a good resolution for that last 11 months of 2007.
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1 comment:
Brian,
I actually just printed off a news article about the savings rate stuff and then went to your blog and there you were talking about it too.
I wanted the article because on March 3 we're hosting a Crown Financial Ministries seminar and I wanted to use some of the info. from the article to use in support of the seminar and to kind of help promote it.
Overall, it really is kind of sad. But I have to admit that if it weren't for a wife that keeps me in check I wouldn't be surprised if I'd be in debt up to my eyeballs -- as I tell the people here in the church all the time, I'm the most materialistic person I know!!
Talk to you later.
Curt
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