Citizen Savings Accounts Meager : Capital Lost for Growh

I think one of the reasons not mentioned here as to why the average savings accounts are small, it's patricianly due to the "lotto mentality", working and denying one self each month to save for the future loses out to hope for the big luck ticket where we can live on easy street without doing anything.

A life lived for only the short run based on a fantasy of getting rich quick will fail.

Where did we go wrong? How did we lose the spirit to take pride in a job well done, those that actually have jobs that is. Where people plan for the future with hard work and common sense, starting with a  saving account and reduced spending. Where people understand who they are and then live a life the best they can with what they have. The future is dependent on hard work and a plan.

Just like the saying. 'there's no free lunch', if you believe others will always be there to take care of you, Social Security, Medicaid and Medicare, your life after work is guaranteed to end badly. These mandates are broke and if you decided to live the good life without giving any thought for the future by maintaining a savings account and a retirement plan, and are broke when you retire, the golden years of your life will not be much fun.

Reduced Saving Means Fewer Jobs and Growth
Source: Veronique de Rugy, "Why Don't Americans Save Their Money?" Reason Magazine, December 2014

November 26, 2014

Various studies have claimed Americans' retirement savings are in trouble, with some estimates suggesting that up to 84 percent of Americans have insufficient savings targets. Veronique de Rugy of the Mercatus Center says that those figures are somewhat overblown. Still, she says the United States does have a saving problem:

• In 1975, Americans had a personal savings rate of 17 percent. In 2005, it fell to a low of 2.2 percent. While that rate has increased somewhat, de Rugy says it is unlikely to continue to increase.
• With less saving, there is less capital, which slows economic growth and investment.
• Recent studies suggest that older businesses are increasingly dominating the American market -- a problem, because it is the young and new firms that create new jobs. This has been attributed to the fall in the personal savings rate.

What to do about this? The answer is not making Social Security even bigger, says de Rugy. While some have suggested strengthening the program, it is unsustainable and underfunded by trillions of dollars. Moreover, she notes that the existence of the program disincentivizes saving; by one count, $100 in Social Security wealth reduces private saving by $40.
Instead, de Rugy suggests that the government do the following:

• Get rid of policies that penalize savings or artificially encourage consumption.
• Replace the tax system with a consumption-based tax.
• Get rid of the Federal Reserve's zero-interest rate policy -- it only discourages saving.
• Reform housing policies that encourage Americans to spend and take on debt.