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Do you think 40% of adults is some insignificant slice of the economy? You're suggesting that 40% of the economy scales back its spending and you don't think that's going to have a devastating impact?
No need to put words in my mouth.
What I said was that most Americans DO have savings accounts of over $1000 (in addition to retirement savings). I also said that this median savings rate goes up as people get older.
But to answer your question - yes, I do think that if possible, everyone should try to save a little more money, but especially younger people. I don't think that $7.62 cents a week (that's $400 a year) from a minority of people in our country is going to cripple our economy. I say "minority" because the majority of adults in the US save more than that per year already.
23 percent of Americans are between the ages of 18 and 34. And 33 percent of those young adults have well over $1000 in savings.
(I've already given those sources several times so I won't do it again.)
As has already been pointed out to you, saved money is eventually spent money anyway. What was saved ten years ago is being spent today in many cases.
Nobody is suggesting money should stop being fed into or circulated within the economy. Our economy is not dependent on every person in it spending every last cent they have the instant they have it. We are a consumer driven service economy, true, but that doesn't mean that any amount of saving will wreck the economy.
Saving is deferred spending. The money gets moved through the economy eventually, just not today. It doesn't disappear, and money that was saved in the past is spent in the present, albeit at less NPV if it was simply socked away versus invested.
If liquid cash on hand detracts from anything, it is lenders who profit off interest paid by borrowers. A person who pays cash for things doesn't pay interest. So someone could buy all of the things you say the economy needs, but they can budget and/or save to pay cash for them instead of adding interest fees associated with borrowing.
Again, nobody is talking about saving every last dime you ever get, but saving enough that if an emergency happens, you won't have to borrow your way to a solution. You're going the reductio ad absurdum route to make your rebuttal by suggesting the economy shuts down if people save money.
That's EXACTLY what people are suggesting. That's literally what people are saying 40% of Americans need to do.
Our economy is not dependent on everyone spending, which isn't happening anyway since we have 60% being somewhat responsible. But we also have 40% who are currently funneling ALL of their disposable income into it. Unless you're telling the 60% who are being disciplined to pick up the slack for the 40% who are not, you and every "concerned" poster here is advocating a recession.
Sadly, savings is not deferred spending. Psychologically, that is not how people who save view money put aside. In addition, most spending is not luxury purchases that can be put off until you find a deal or until you hit your target savings or some other kind of "mental" release. It's current and spontaneous needs. Thinking $1 saved today is just a $1 spent tomorrow is not a realistic view of people's spending.
I also think there are people, such as myself, do not see the need to have a savings account.. I have a stable job, 80 acres of farmland, when retire will have a good pension/SS and a Roth thats currently around $220K and a brokerage account with about $50K in it.. I have credit lines on my credit cards of about $50K and do not carry balances..
And I do not having a savings account, figure if something goes south and can use a credit card to get me by..
If understanding the basics of the American economy makes one a liberal, while NOT understanding makes one a conservative, then so be it.
I can't speak for liberals, but I have not seen anyone make such argument. I have seen several people try to explain you what keeps the US economy moving, but either you just don't get it, or you pretend to not get it, and instead try bury it under the us vs them mentality argument.
There is something that triggers you when you see people eating in restaurants or owning a cell phone. It seems to make your blood boil. You feel they should be ashamed they spend their hard earned money in things basic things (which you call "luxuries"). These things are considered pretty basic things in any country, let alone one where we have "the best economy in history of mankind".
I'm about to give up on you, since your post is full of falsehoods and untrue accusations.
Nothing "triggers me" when I see people eat out in restaurants. Don't be ridiculous. I think it's great when people are successful enough to enjoy a pleasant meal in an upscale restaurant and still have money left over for savings. What triggers me is irresponsible people who buy luxuries, and then, when they have an emergency and need a few hundred dollars, turn around and try to borrow money from responsible people since they themselves don't have any savings.
And we disagree on what "basics" are. An iPhone is NOT a basic; it is a luxury. Apparently, you think people are entitled to things like Iphones (since it's a basic, after all) even though they don't even have $400 in savings and thus are unprepared for a minor emergency, be it a car repair, a new HVAC system, or a problem with a tooth.
People like you, encouraging people to be financially irresponsible and spend every last cent of their paycheck, portends a major disaster when these people reach their 60s with no savings. (If they follow such poor financial advice.)
(And what's this about "explain me"? I thought you were an American, living in this country.)
Now, in the past - like in the 1960s especially - the personal savings rate was higher (though it's been on the upswing over the past few years). Yeah, I think we can save a bit more money per individual and still be OK.
That's EXACTLY what people are suggesting. That's literally what people are saying 40% of Americans need to do.
Our economy is not dependent on everyone spending, which isn't happening anyway since we have 60% being somewhat responsible. But we also have 40% who are currently funneling ALL of their disposable income into it. Unless you're telling the 60% who are being disciplined to pick up the slack for the 40% who are not, you and every "concerned" poster here is advocating a recession.
Sadly, savings is not deferred spending. Psychologically, that is not how people who save view money put aside. In addition, most spending is not luxury purchases that can be put off until you find a deal or until you hit your target savings or some other kind of "mental" release. It's current and spontaneous needs. Thinking $1 saved today is just a $1 spent tomorrow is not a realistic view of people's spending.
No, but $1 spent today (when you have no savings) is $1 you will have to get from someone else to cover your retirement expenses tomorrow (assuming no pension). It is the height of irresponsibility to just buy.....buy.....buy and figure a responsible person will bail you out once you reach your 60s, penniless, but with lots of expensive "toys."
First, it's not an all or nothing thing. People aren't go to stop putting money into the economy if they cut back on luxuries (and iPhone is a luxury) in order to build some savings.
Second, what happens when people follow your "instant gratification, think-for-today" method of spending every last cent they get their grubby paws on, regardless of the fact that they have no savings? I'll tell you. They get to their 60s, retire on $1500 in SS, and find that they can't live off that (and since they have no savings, they have no other source of income*). Then the liberals will insist that people who have higher incomes, people like me who made smart financial choices - and sacrifices - will have to pitch in to support the non-savers, and thus the extra money we saved so we could buy a nice retirement home by the beach, or finally travel the world since works schedules no longer limit us, will stop putting money into the economy to meet our higher tax burden.
Your mistake is that you are only considering people who spend, spend, spend with abandon NOW and are ignoring the cost that will bring to people who lived responsibly LATER.
*The only exception are federal workers, many of whom retire with high five-figure or even six-figure pensions. If I were guaranteed a pension of $80,000 for life - and pegged to inflation - I would have spent more freely too.
OMG! That's LITERALLY WHAT YOU'RE TELLING PEOPLE TO DO! 40% is spending 100% into the economy. You're telling them to STOP doing that. What happens when you subtract X from 100%?
#2... Your 2nd point is exactly the issue. We've created a perverse catch-22 for ALL of America. People have to make the choice between funding their retirement now or downgrading the American economy to a stagnant mess, which screws everyone now.
Again... if that 40% cuts back their spending, WE are screwed b/c that affects the economy NOW and portfolios for retirement savers in the FUTURE. That 40% has to keep spending for America's economy to maintain it's weak-ass economy.
This is the exact result of the wealth inequality YOU guys keep saying is fine.
Your last point is so divorced from how the economy works, I don't know how else to explain it to you. If people stop spending now, your IRA takes feels that hit now and your retirement plans take the hit later. Do the math on what your portfolio would like with 30 years of 3% growth vs 9%.
And we disagree on what "basics" are. An iPhone is NOT a basic; it is a luxury. Apparently, you think people are entitled to things like Iphones (since it's a basic, after all) even though they don't even have $400 in savings and thus are unprepared for a minor emergency, be it a car repair, a new HVAC system, or a problem with a tooth.
You invented the claim about broke people spending $1000 on top of the line iPhones, and have provided nothing to back it up. Nothing. You can buy an older iPhone for peanuts, and other brands for even less. You THINK they buy a new phone every month and have no money left for anything else, but the truth is that you have no clue how people spend their money.
We are talking about what people do with their own money, so I have no clue there you get the "entitled" idea. You ARE entitled to spend your own money, but for whatever reason this offends you to no end. The point, which flies a mile over your head, is that US economy is heavily based on consumer spending, and this topic proves 40% of Americans spend all they have, and yet the economy is average at best.
Quote:
People like you, encouraging people to be financially irresponsible and spend every last cent of their paycheck, portends a major disaster when these people reach their 60s with no savings. (If they follow such poor financial advice.)
Encouraging to do what? You invented the "brand new iPhone" saga, so that didn't come from me, it came from you. You invented it so you could argue against it, while pretending some are arguing for it (but no one is). That is what strawman arguments are all about. You might as well argue with yourself.
No, but $1 spent today (when you have no savings) is $1 you will have to get from someone else to cover your retirement expenses tomorrow (assuming no pension). It is the height of irresponsibility to just buy.....buy.....buy and figure a responsible person will bail you out once you reach your 60s, penniless, but with lots of expensive "toys."
And that's why our economy is screwed. We're sitting a bomb and you guys refuse to address it. You want people cut back their spending, but also you want your retirement portfolio to grow at a rate that provides you with a comfortable retirement. Those are mutually exclusive positions in our current economy.
Instead of addressing the issue, you call it "socialism" to correct the imbalance that SCREWS YOU OVER.
Liberals are hopeless. I give up. Go ahead and spend all your disposable income and buy $1000 iPhones when you don't even have $400 in savings for emergencies. Just don't come crying to me when you're 65, find you can't live on a $1300 SS payment after all, and want me to contribute to your support via a new taxpayer-funded support system.
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