This thread got me thinking about the negative savings rate in the U.S. and how this was horrible for the economy. I was thinking, geez how come these other people don’t wake up, smell the coffee and start saving … like I do …
Or so I thought.
Since the point I left school about 30K in debt, I’ve always considered myself an obsessive saver. So I started doing the math. For the last 8 years, our family has been maximizing IRA conributions (first ROTHS, then non-deductible IRAS), we’ve been maxing out our 401k (defined contribution plans) since we’ve been employed. We also put a small monthly amountinto 529 plans for our kids (ages 7 and 4) for college, and devote the remainder of our income to living costs. I figured that our annual contributions to these things amounts to about 80% of the median family income in SD. So I figured that we were pulling the weight of about 80 families (when the savings rate was at 1%).
However, after careful research, I figured out that I AM THE PROBLEM . Why ? It turns out that of the >$45K + we “save” each year, only the 529 plan contributions counts. So we are actually only saving about 1%, according to how the savings rate is computed.
I have to apologize to society at large. I am truly sorry. To do my part to bring the savings rate back up to 7%, I need to stop contibuting to my retirement accounts and instead start paying taxes on those dollars and save them outside my retirement account. That way I can go from being part of the problem, to part of the solution.
