Wednesday, March 10, 2010

Americans are still living in the land of dreams

Most Americans still unprepared for retirement - survey

The percentage of American workers with virtually no retirement savings grew for the third straight year, according to a survey released Tuesday. The percentage of workers who said they have less than $10,000 in savings grew to 43% in 2010, from 39% in 2009, according to the Employee Benefit Research Institute's annual Retirement Confidence Survey. That excludes the value of primary homes and defined-benefit pension plans. Workers who said they had less than $1,000 jumped to 27%, from 20% in 2009. Confidence in ability to save enough for a comfortable retirement hovered at 16% of respondents, the second lowest point in the 20-year history of the survey.

"Americans' attitudes toward retirement have clearly tracked the economy the last couple of years, and that seems to be the case in 2010," said Jack VanDerhei, EBRI's research director and co-author of the survey, in a statement. The percentage of workers who said they have saved for retirement fell to 69%, from 75% in 2009.

While VanDerhei attributed the decline in current savings rates to job losses, mortgage problems and the suspension of corporate 401(k) matches in 2009, he said the economy isn't entirely to blame. "In previous years, there were a whole lot of people who had nothing to begin with," said VanDerhei. The gap between what Americans have saved and what they'd need for retirement is forcing workers to prolong their working years. Full Story=


Clearly,  the story above indicates that the majority lived well beyond their means. It's not that they did not make enough to save, it’s just that they spent more than they made because they thought tomorrow would always be sunny. In parts of Europe the savings rate is as high as 20% of one’s income and in most parts of Asia they save as much as 35% of their income.

For years, we have been warning and advising our subscribers to live 1-2 standards below their means and for those who could deal with it to push it to 3 standards below their means. In real terms 1-2 standards below means living within your means, as most have never lived within their means. Thus you would only move below your real standard if you moved 2-3 levels lower. However, any move down is a move in the right direction. We also suggested that this money should have been deployed into long term investments such as Gold, silver, Palladium and other related commodities. Strong pull backs should have been used to deploy new funds.

Continue to live 1-2 standards below your means, and deploy the saved money into hard assets. The problem going forward for those who have saved is dealing with the pain they are going to witness in the years to come. Believe it or not the current situation is still decent in comparison to what lies in store for the unprepared in the years to come. Can this path be altered? Off course it can, nothing is engraved in stone, but for that to occur, the government would have to cut its debt down, drastically cut back on new expenditures, reduce services, close its bases all over the world and stop being the police of the world, etc., chances of any administration implementing these severe changes are very slim.


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