Saving too little

For only the fourth year in U.S. history, the 2006 savings rate of Americans was a negative number. The minus-1 percent savings rate was the worst in 73 years, following a minus-0.4 percent savings rate in 2005. The other two minus savings years were during the Great Depression.

When the savings rate slips into minus territory, it means Americans are spending more than they have left after paying taxes. Many Americans say they can't save, because paying their bills eats up all they have to spend -- and then some. That's when credit-card balances and other debt start to mount up.

Which is at the heart of the problem.

When Americans spent more than they earned in the Depression, it was because so many workers were out of jobs. Today's unemployment rate continues at an economically healthy pace. Most working Americans are employed. So what has changed?

For one thing, credit is readily available even to borrowers with shaky financial histories. Credit in the 1930s was difficult to come by and required safe collateral. Credit purchases were rare except for major borrowing such as purchasing a home or farm. Necessities were purchased with cash or barter. Luxury items were sold only to those who could afford them, for the most part.

Now most Americans have credit cards. Too many of them have already used their maximum credit limit, sometimes on more than one credit card. And if they are making minimum payments, cash-strapped borrowers are paying far more in interest than reducing the balance of their debt.

We are a consumer society, and easy credit makes many buyers believe they can -- and should -- own that big-screen TV or the latest computer gadget right now instead of waiting until there is money in their checking account to pay for it.

When today's overloaded consumers say they can't save, they are ignoring the examples set by their parents and grandparents, particularly those who remember all too well the deprivations of the Great Depression. These are the working Americans who, when they found jobs with steady paychecks, religiously set aside some savings -- small amounts by today's standards, but with long-term earning power that has rewarded them with financially secure retirements.

"Retirement" is big word for today's baby boomers who were weaned on credit-on-demand and have too little -- if anything -- set aside for what has long been described as the golden years.

Getting ready for retirement takes a great deal of paycheck discipline. For many, it means passing up some luxury items. Sadly, for too many Americans approaching the traditional retirement age, the spending spree of their working years will mean more years in the workforce.