americans and saving

http://biz.yahoo.com/special/pf091206_article1.html



just read this article and found it interesting but not surprised!

Of my head I can’t give you accurate facts and figures. But here in Australia we had a debt problem that was heading out of control, this was back in about the 80s. Phased in over many years with gradual % increases was compulsory superannuation. You can’t employ without paying additional 9% super on wages now. Even though at first many preached this would destroy the economy, these critics have been proved wrong. Our savings rate is now amongst the highest in OECD countries with a rate at 24%.


Many here would say that compulsory schemes would go against democracy and FREEDOM maybe so, but it was done in the interest of the country's long-term benefit. To date I personally think it was a great move for this country.

I personally think that our savings rate is so low because many (ignorant) Americans think that the Social Security part of their paycheck will support them in their retirement years. Honestly any thinking person would not rely on Social Security, but the reality is many are non-thinkers. Too many. And Social Security was instituted and sold to Americans as a retirement program, even if only as a suppliment.

I've spent a lot of time teaching employees who are willing to listen to me that they need to save, and teaching them HOW to save. The problem is that many people do not see the value in something like $5. They look at $5 and they say it is ONLY $5. I look at, and teach them that $5 per WEEK, multiplied time YEARS of savings actually is the difference between poverty in their retirement years and having a nice little sum of money to support them. I try to show them that if they get a $20 raise, they should set aside ANOTHER $5 of that $20 so now they are saving $10, and they still get the immediate benefit of 3/4 of their raise. And if each time they get a raise they should set aside part of it.

Honestly I don't know how many people have used that little saving techinque long term, but I know many have started saving. I don't know how many will continue to save after starting. But it amazes me that people don't think that saving a small amount is worth it, so they just don't bother to save at all.

Bob, what you say about saving is exactly spot on. Unfortunately many folks will never learn. As these folks age they have no choose but to rely on social security. Western society generally we will not throw them on the scrap heap, our hearts don’t allow that. This is why compulsory super is good for all.

Many here for the first time in their live took an interest in the share market when compulsory super was introduced. Some folks chose to manage their own super while others go through brokers.

I am no expert by any stretch but one of the things to come from this was the huge injection on money into the business economy rather than it being just spent on consumables of which most are imported.

B_Skurka said:

I personally think that our savings rate is so low because many (ignorant) Americans think that the Social Security part of their paycheck will support them in their retirement years. Honestly any thinking person would not rely on Social Security, but the reality is many are non-thinkers. Too many. And Social Security was instituted and sold to Americans as a retirement program, even if only as a suppliment.

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I hate to admit it Bob, but that is one reason why that financial advisor that I asked about has worked out pretty well after three meetings.

$500 a year, if at anytime we are not satisfied, he will refund our money.

He's given us direction and a plan which sounds good, has all of our money info and has brought ideas to us that we never thought of before.

One of the first words out of his mouth was "don't plan anything for social security".

On that note, per this thread, after going over our "money", he was impressed that the only debt we had was on the house and land, which for it's value, was a good investment.

I can say without any regret, listening to someone who can bring options to the "table" as far as insurance polcies, roth accounts and investing your 410k was a move I nor my wife should regret.

He was able to put savings in a 30 year plan in "perspective" and in particular, taxes on that income that you can end up paying.

So far, so good.

dzalphakilo said:

I hate to admit it Bob, but that is one reason why that financial advisor that I asked about has worked out pretty well after three meetings.

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I think one of the big failings of our education system is that they don't teach basic life budgeting. In fact it is a political football and that is why it is not done. Most schools will not even teach high school kids how to balance a check book let alone teach them how to save, or the value of saving for the future. When the culture of society is such that saving is not valued, and not taught, then it is no wonder that so many people, who are otherwise responsible, fail to save.

B_Skurka said:

I think one of the big failings of our education system is that they don't teach basic life budgeting. In fact it is a political football and that is why it is not done.

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I owe a big thanks to my mother, who although went through allot of aggrivation "trying" to teach me about a check book and having more money in the bank than what I owe, did I pretty good job of teaching me. Funny, the older I get, the more I'm in awe of my parents and what they have accomplished in life. My parents really never had much money, after my father retired from the Air Force, they bought a "small" 1200 sq. ft house with a little land, and spent my high school years there. Growing up, thought we never had allot of money family wise. Never drove "fancy" cars, never bought anything "big" for the house, and it seemed that during christmas, while most of my 20 or so cousins my age seemd to get "everything", I got one or two gifts (no complaints).

Have to laugh when I remember a couple of times out at a store with my mom growing up because when she actually used a credit card, sometimes it would come back as "no good" because she hadn't used it in years and was "deactivated".

I remember getting out of college and being on my own, and having to go over some of my finances with my mother, with her leaning heavy on me to join the federal credit union and to start "investing" at least some of my money. At the time, I was looking for an auto, and shopping for interest rates. My mom mentioned to me that THEY would loan me the money and I could pay them back interest free. I told her that I didn't want to do that, that I felt it would/could be a financial burden on them. I'll never forget when she then pulled out her check book and some of her other "financial" paperwork (first time that I got to see most of this). I was dumbfounded, she could of afforded to buy a Jaguar and a house (at that time at least) and pay cash for it! She always knew that I wanted a Porshe 911, and came close to spending everything I had when I got out of the military for a used one, but she talked me out of it, that money was for college. When she showed me her checkbook, she asked me seriously if I really still wanted that 911. I looked at her and asked "really?" She bursted out laughing, telling me "no, just kidding, but you should of seen the look on your face!" She had a great sense of humor which I still miss at times.

I remember telling her that I never realized they had so much money, and asked her "how come you guys never spend anything on something "big" for themselves. I'll never forget her telling me "I have your father, we have everything we need, when we want something we pay cash for it, and we don't owe anyone anything, and thats the way we're going to keep it".

The older I get, the smarter my parents become.

My only regret is that when I first found my "career", I didn't invest more in the 410K and invest differently (I played it to safe, might as well as put my money into bonds ). My problem was at that time (in my late twenties, early thirties) is that I never looked thirty or forty years down the road. Honestly, never thought I'd get married, never owned a house before, spent most of my weekends enjoying outdoor activities with my friends, and pretty much just having a blast. Honestly, never thought those times (retirement) would come, and that I would actually have "financial responsibilities" and figured I would "just deal with it" when it came. At least working with this guys (advisor) has opened my eyes to an extent.

Man, what doesn't the goverment tax you on