Here’s real fight. Is the recession good for us? UCLA economics professor Ed Leamer sees a silver lining in the worst recession since the 1930s: “The recession .. is a much-needed break from many years of unsustainably high levels of building homes, cars, offices and retail stores. … Though it’s a painful process, we will emerge in a better place with a more appropriate stock of homes, cars, retail stores and office buildings, a higher savings rate (which is essential to funding the retirements of our growing elderly population).”
To his credit, Leamer acknowledged the pain but saw the gain if people built up their pensions. Sadly he is wrong about that advantage. Though savings rates always go up in recessions, including the recession that started in 2008 (see the Bureau of Economic Analysis and Conerly’s blog) workers don’t have better pensions.
Today, the results of a new survey of over 4,000 workers speak precisely to this point: Over 20 percent of workers reduced their 401(k) contributions or personal savings in the last six months to get by financially. And the number of workers saying they do not participate in any programs such as 401(k)’s, IRA’s, or retirement plans has risen to 36 percent from 31 percent in 2008.
What about the majority who still save? It doesn’t amount to much.
Thirty percent save less than $100 per month. So why are overall savings rates increasing? People are paying off debt. We’ve got a doozy of a problem on our hands as over 73 million boomers approach retirement age with lousy pensions.
We really need a grip on the retirement readiness of people age 50 to 65 and what it means when they try to stay in the labor force or retire with falling living standards.
Back to cat food dinners?
