I have not written much in the way of financial advice here on my blog. That’s mostly because I’ve figured that there is so much of that already available, people wouldn’t really be interested in reading it here. But it’s also because it’s hard to make those posts funny.
A couple of days ago, a commenter on my U.S. News post pretty much agreed. He said, “All of the suggestions are like DUH! Like nothing new!” I don’t disagree. All of the reasonable financial advice has been given over and over and over again.
Which makes me wonder two things:
1. Why are there still so many new articles each day in magazines and newspapers, on websites and blogs, and in brokerage and banking literature, all saying exactly the same thing, over and over again? And,
2. Why is the savings rate in the U.S. only 4%? Nope, it’s not the recession. Since this recession hit, the national savings rate has actually increased from meager levels hovering around 1% in 2004 and 2005 (when we were experiencing boom times in the economy and stock market), quadrupling now that we’ve just finished the worst recession in my lifetime. In fact, according to the data from the Bureau of Economic Analysis, the last time we saw savings rates that were actually in the double digits was in the early 1980’s.
It certainly isn’t due to lack of information.
In 1980, when the national savings rate was hovering around 9-10%, a dramatic shift began in the way retirement would be funded in the U.S. Congress created the 401(k) plan, which wound up shifting the responsibility of saving for retirement from employers to employees. According to Wikipedia:
“In the mid-1980s, there were fewer than 8 million participants with less than $100 billion of assets in 401(k) plans. By 2006, there were seventy-million participants with more than $3 trillion of assets in 401(k) plans.”
If you look back at the chart of savings rates, the personal savings rate has been steadily declining as participation in 401(k) plans has been steadily increasing.
Clearly this shift has created a huge demand for financial planning information, and there certainly is an abundance of it. But it appears that most people are not following the advice, so why is there so much of it? Do we think if we keep reading every article we might find some way to save for retirement that doesn’t include living below your means, shunning debt, maxing out on retirement accounts and capturing the employer match, creating and maintaining a well-balanced portfolio, staying out of retirement accounts before retirement, paying off the mortgage, and maybe cutting back a little more on spending?
Or is it really that we just wish someone could make it funny.
This is an article from Retirement: A Full-Time Job