2006 Personal Savings at 74 Year Low
Time.com reports that personal savings (that’s yours) are at a 74 year low.
The only other years that had negative savings rates prior to 2005 and 2006 were 1932 and 1933. During the Great Depression, people were unemployed and had to dig into their savings to avoid dying from starvation.
However, why aren’t we savings today? We’re not in another Great Depressions. Perhaps it’s because it’s so much easier today to buy things. We can buy things from anywhere in the world from our couch or office chair on credit and have it shipped to our front door. Prior to the internet, people actually had to walk or drive to stores to shop, unless they purchased via phone from a catalog.
My summary:
We’re spending too much, too quickly, and we’re doomed when the baby boomers can’t work anymore. Gen-X and Gen-Y will be supporting their parents and grandparents well into their 90s and 100s because of the advances of medicine, while not being able or willing to save for their own retirements.
Of course, I am known to be a pessimist.
Hmmm . . .
Yeah there are a lot of poor savers out there. But then again the numbers quoted aren’t adjusted for the number of people who retired this year and are, therefore, not making any earned income. They may just be necessarily dipping into savings in the form of taking distributions from a 401k and IRA. Remember, 2006 was the year that the first baby-boomers turned 60. For this reason, we should expect to see the savings rate dropping every year for the next 10-15 years. Due to massive retirement, we should also expect to see an increase in demand for labor as well as products and services for retirees. So yes . . . at first glance, it looks bad, but we might be misinterpreting the numbers. It wouldn’t be the first time.
Also lifespan in America probably will not increase as much as pundits say it will. There’s a school of thought that pharm. companies, who are often credited with all the medical breakthroughs, are no longer making innovative new drugs, but simply making the same types of drugs over and over again and repackaging them as innovative new drugs at higher prices. It has a lot to do with the timing of patents and the need for generics. Additionally, patent-driven prevention efforts are lower as seen with the increase in preventable conditions such as STDs, obesity and obesity related conditions, allergies and asthma related to non-breastfeeding, certain types of preventable cancer, and to a certain extent heart disease. Patient-driven prevention still holds a larger piece of the longevity pie than advances in medicine.