America's low savings rate

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Sat Aug 18 23:00:43 PDT 2001



> Why is America's savings rate so low?

I think it's because of the tax policy that encourages 401(k) contributions. Many people put "some" money in there, but the majority of their balances are gains from the investments they made. So they think they are "saving" more and don't do savings outside of that vehicle: they think they are covered.

These gains don't show up in the "savings rate" so it looks artificially low.

/jordan



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