The Atlantic recently published an article in which they outline five compelling theories why Americans don’t save more for the future:
- Americans stopped saving when their incomes stopped growing
- The poor and middle class went into debt to buy houses
- U.S. policies make it easy to not save money
- The U.S. is uniquely susceptible to conspicuous consumption
- The pressure to keep up with richer neighbors has been greatly exacerbated by rising income inequality
It seems to me that all five theories contribute in part to the current situation. However, I disagree with the authors belief that the solution requires more government programs and involvement. Even the author contradicts himself: The lottery hurts the rate people can save and the government’s push for homeownership contributed to the housing crisis.
Recently, I have become quite interested in how our clients and prospects save and in particular the amount they keep set aside for emergencies. Don’t these government programs, such as social security, storm damage, health insurance, unemployment, mortgage forgiveness, student loan forgiveness and multitude of other programs, have an unintended consequence? Are Americans, as a whole, becoming more dependent on the generosity of others and the government? This point is not well addressed in the article.