Why Don’t People Save?

By Richard Wagner | Garden of Knowledge

Jun 23

Recently the Nazrudin Project list serve has been addressing an intriguing question: “Why don’t people save?”

Considering that personal savings is something of a 21st century survival skill, it seems relevant.

As you might imagine, the conversation has been vigorous. It has ranged from variations on a couple of themes. Many think that people are self-destructive idiots who do not know their own best interests when the evidence is right in front of them. Others observe that people will generally pick the least painful or the most pleasurable alternative when given a choice. Either way, when they perceive great rewards for saving, they will save. If not, the money gets spent.

Of course, several contrasted “Greatest Generation” savings habits formed during the Great Depression with “Baby Boomer” penchants for self-indulgence and instant gratification. That fruit hangs low–though I am not sure it helps answer the question.

Personally, I see the issues in a cultural context. We have always had savers. We have always had those who run rougher and closer to the edge. That is not new. The significant changes involve life spans and the roles of money in our lives. Our “retirement plans” are no longer our sons and daughters for a none to three year period after ceasing useful work. We need to take life’s last quarter/one third more seriously. If the doctors are right, many of us may have forty year left over life where we are dependent upon unearned income from investments and savings and largely non-existent pension plans. Some will get the support of family. Others can hope for government assistance or a timely visit from the money fairy.

Twenty to forty years times even modest lifestyles are expensive. They generate numbers that are hard to grasp. Unfortunately, most of us have failed to grasp them. They are not funny. The seriousness of this issue is becoming more apparent every day as baby boomers ease gently into our “golden years.” Life as we know it is changing. How will we, as a culture, take care of each other if there is collective under saving?

We need money throughout the whole of our lives but only earn for a half of it. Our needs to save occur decades from when those savings will be needed. It seems far too many of us have failed to make the adjustments.

Why don’t folks save? Apparently, many of us are waiting for the money fairy. Yikes.

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