Ignorance and Glamour
The reasons Americans don't save more are complex, ranging from lack of knowledge about the financial vehicles and their benefits, to a popular culture that glamorizes consumption.
Many families are strapped despite the good times, and simply don't have enough money. "Right now I'm at the limit," says Donna Bradford, a 45-year-old inspector at a Georgia yarn factory. She contributes only about half of the maximum allowed to her 401(k), and a higher tax break wouldn't change that. "I've got two kids in school, one in college, and I just can't afford more," she says.
There is also an ingrained cultural streak -- call it a reckless optimism, or a willingness to take risks -- that leads Americans to salt away less than, say, the Japanese. No tinkering with the tax code is going to engineer a national personality transformation.
Bibi Qualls-Valenzuela, a Florida music teacher, is 60 years old and joyfully admits that "I don't have any money" stashed in an IRA or even a savings account. But she isn't too worried about her future. "I plan in five years not to be where I am today," financially.
How? Ms. Qualls-Valenzuela buys lottery tickets every week. She has got some books about "how you can buy houses for nothing down and amass a lot of money." She is contemplating selling her house and "investing in heating oil, and options like gold, platinum and stuff like that." She admits she could cut back on eating out or going shopping, "but what else am I going to do?" she asks. "I don't drink. I don't smoke. I don't date. Shopping is what I enjoy -- it's like a hunger for me."
Funding a Dream
Joseph L. Jones is one of America's dis-savers. He is 47 -- a time of life, the experts intone, for preparing for retirement. Yet Mr. Jones has pulled $30,000 out of his IRA in recent years, even incurring the penalties, to help pay for his dream of expanding the Cleveland remodeling and construction business he founded five years ago. His business is growing quickly, and he thinks he will strike it rich. "The worst case is I'll get totally wiped up," he says, "but I'm capable of starting over again."
Saving too much, Mr. Jones opines, is practically un-American. "In a lot of countries, there's fear, and fear of what happens makes you save for that proverbial rainy day," he says. "In America, there's hope -- that sunshine of opportunity."