It Doesn’t Have To Hurt

I see that the online version of this doesn't have the terrific graphic that ran in the magazine - "no more rainy-day fund". Why? Also, I am trying to track down a graphic that appeared in the magazine a few weeks previously - four charts in a box showing the relative levels of consumer, government, bank, and non-bank business debt over a fairly long period of time - can someone point me to the article/issue? Thanks

This article makes some good and valid points although the solutions need to be seriously questioned. The author talks about the ways "households saved were in pensions, cash-value life insurance, and by paying off their home mortgages. Then he goes to the solution as to put money into 401(k)s. Doesn't he realize people who have used that strategy have lost in many cases between 40-60%. Those with cash value insurance, that was structured right, haven't lost a dime of their values this during this down turn.

Read the article in the wall st. journal today on page A15 on income taxes by By ARI FLEISCHER
Everyone Should Pay Income Taxes
It's bad for our democracy to exempt half the country.

What a joke..

F\/ck the government.

I can remember when my father retired in the early '70s his pride that he had $16k of savings built up, invested in CDs at the local savings & loan, earning interest considerably above inflation. This was not uncommon. People used to be able to save for their retirement and live off the interest when they retired. How times have changed. Now my supposedly conservative equity mutual funds have lost half of their value in the last six months. Who knows when and if they'll ever recoup their losses? Also, as other commenters have pointed out, hyperinflation is a growing threat - in spite of what the government would have you believe. By one account (dailyreckoning.com), government bailouts have amounted to $13 trillion so far, dwarfing the value of the gold in Fort Knox. Who would have believed such a number six months ago? Any sense of fiscal responsibility in Washington has been lost. The politicians can only see until the next election.

I did okay, paid off my house and didn't use it as an ATM. My 401K gained 4% last year, but I was conservative about the investments. I never saw double digit gains but never lost money. We want to encourage savings but I am going to tell you now that hyper-inflation is coming and there is no way to save enough in the nest ten years. I will be broke when all this spending and borrowing by the Federal government takes hold. I am retired with a pension but I would bet I will have to go back to work in the next few years. Savings rates are only part of the equation. Runaway government spending and taxation can easily make saving impossible.

Saving is not a part of Obama's economic recovery plan. His plan is for Americans to spend their way out of this recession.

We saved, and saved and saved (401K, savings, IRAs.) And then we lost 45% of our savings. And whenever we had capital gains, we got taxed, we invested in a home and lost a huge chunk of its value. So no matter how hard we tried to save and invest wisely, we always got screwed, one way or another. Since we are in our mid 50s, we have now decided to invest more on ourselves: we are having all the fun we did not allow ourselves to have because we were saving all our money for tomorrow. We still have enough for our retirement, perhaps not as much as we did, but we learned that "tomorrow" may never come, and you have to enjoy today, all in a balanced manner. So much for teaching other on saving and investing!!

Until people can trust that their savings and investments are not only safe but actually yielding a modest return, there is no incentive to save. Wall street has tried to put the golden goose in the oven. It got away, but it learned a lesson.

One big problem that has increased significantly is the ability to move retirement plans and balances from one employer to another. Today the career with one company job is rapidly disappearing. Transport of retirement funds from one company to another needs to be as seamless as possible. I lost company matching funds when I lost a job through a buyout. The buyer concluded the purchase only a couple of weeks before the contract's 5 year vesting would have kicked in. Everyone who lost their job lost 5 years of matching company funds. We can use laws used to protect the worker from losing matching funds unless the worker is terminated with cause or a voluntary quit, provided the workplace remains a going concern. Pension funds are too often used as corporate assets rather than treated as belonging to the worker.

When it comes to retirement savings we can do better. One of the strengths of the US economic system is that we have little savings. Our money is kept in circulation, creating more jobs, which creates more spending cash. Savings is a backstop, an insurance policy of sorts. And, like normal insurance, the cost can exceed the benefits. We need to increase our savings, but not necessarily by a large amount. Look at the countries with high savings rates and you will see economies with a different set of problems, but problems none the less. Japan had a booming economy and high savings rates. Their boom came from exports, and little on internal growth. When Japan has a slowdown they are slow to recover. They simply don???t put enough money back into their own economy to start it up without external help. China has a terrible problem with high savings. Their massive population is their biggest potential market to create jobs, but few spend enough to boost their own economy. Increase our savings, but don???t handicap our economy in the process.