We all question the Federal govt’s numbers on inflation, GDP, and others as potentially cooked, but cannot see the flaws in the way savings rate is computed.
The official numbers have some deficiencies. They don’t count capital gains, and they don’t count contributions to retirement plans.
I have been saving about 25% of my salary (before taxes) to retirement accounts over the last decade. What a shame. I have been contributing the this nation’s decreasing savings rate problem. I apologize to all. To help out, I should probably eliminate my retirement contributions and take that money after tax and stuff it into a taxable account. At least that way the savings will “count”. Of course, that will cost me over $10K in additional taxes per year, but hey, that helps the budget deficit.
I think the government should sponsor an edumacation program that encourages after tax savings as opposed to the tax-deferred investment vehicles in which people are throwing away an opportunity to improve their savings rate. This would improve the nations savings rate.
Also, I think it’s entirely appropriate that the Government ignores Capital gains when computing the savings rate. That $3 Trillion in capital gains per year from the stock market really doesn’t matter, does it ? That’s only about a fourth of our country’s GDP, right ?
As for 401K balances being insignificant at an average of 50K … that comes to about $50 Billion per million accounts. If we assume that there are about 50 million 401K accounts that’s about $2.5 Trillion. Yeah, that’s small potatoes. I’m sure that nobody ever changes jobs and rolls their 401K into IRAs either. So lets ignore any IRA balances or even contributions as savings.
