2006 personal savings drops to 74-yr. low

[thekid]

Re: 2006 personal savings drops to 74-yr. low

Here's an article on the way the government defines savings that I found interesting. It might dispel some of the gloom.

See this article.

Well, I find some of the dispelling in this article a bit shacky. It questions the commerce bureau report because it fails to take into consideration rising home equity and investment gains. I don't believe, however, that these are savings. The average net worth may not be as bleak as the low savings rate may indicate, but the study pertains to savings rate, not net worth. It still remains that, overall, people's income is lower than their expenses. A rise in maket value of their homes and a healthy stock market do not change that.

I do agree, however, that retirement savings should be calculated as savings even if it's in pre tax dollars.

[Joan.of.the.Arch]

Re: 2006 personal savings drops to 74-yr. low

I totally agree with you, thekid.

[meaghanchan]

Re: 2006 personal savings drops to 74-yr. low

Err, sorry... Posted in the other thread before I saw this one. Reposting what's relevant.


Under the guidelines the government uses for this report, a person who's saving 20% into their 401(k) (which isn't counted in the savings rate) but who is spending slightly more than the leftover 80% could be counted as having a negative savings rate, when they're really saving nearly 20% of their income.

I mean, overall... yes, our country loves to spend money. But it's important to have accurate figures, and these, I think, don't really reflect the reality.

[Broken Arrow]

Re: 2006 personal savings drops to 74-yr. low

Hehe. The ratings on that game show would be awful. Watching people eat Ramen noodles and shiver in their 55-degree houses would get old pretty fast.

Hey hey hey... what're you trying to say about me?

[disneysteve]

Re: 2006 personal savings drops to 74-yr. low

In a way, rising home equity should count as savings. For example, I've got a home equity loan. In the past year, I've made several extra principal payments on that loan amounting to a few thousand dollars. Had I put that money into a mutual fund, it would count as savings for the government study. But since I used it to pay down debt and increase my home equity, it doesn't count. That really doesn't make sense.

The way retirement plan contributions aren't counted as savings is ridiculous. More and more workers have 401K or 403B plans and are putting at least something, and sometimes quite a bit, into those plans. How can you not consider that to be savings? Leave it to the government to come up with such a twisted calculation.

[bjl584]

Re: 2006 personal savings drops to 74-yr. low

My personal savings for the year 2006 were the highest that they have ever been in my life. Yay me for going against the national average!

[sweeps]

Re: 2006 personal savings drops to 74-yr. low

I was thinking... Bankruptcy lawyers everywhere must be dancing in the streets.

[vsjhoc]

Re: 2006 personal savings drops to 74-yr. low

Bankruptcy lawyers everywhere must be dancing in the streets.

Not really. The new laws require them to certify their clients' statements of assets and liabilities. I wouldn't want to stake my career on trusting that Bankruptcy Bob has told me the truth, the whole truth ...