CONGRESS LOOKS AT WAYS TO BOOST SAVINGS

The U.S. savings rate is the lowest it has been in 67 years -- just as 76 million Baby Boomers start retiring. In fact, the federal government calculates overall savings among Americans is a minus figure if you put personal savings and personal debt together.

Many older Americans, particularly those who have already retired, were instilled with the advantages of putting aside a little something from every paycheck. This education came from the experience of living during the Depression or having parents who didn't want their children to endure such hardships.

The U.S. House, recognizing that far too many Americans today aren't prepared for their retirement years, has overwhelmingly approved increases in the savings limits on IRAs and 401(k) plans. The bill would allow maximum annual savings of $5,000 in Roth individual retirement accounts by 2004, up from the current limit of $2,000. And American workers who have access to 401(k) plans would be able to invest up to $15,000 a year by 2006, up from the current $10,500.

In addition, the bill has several incentives for more companies to offer pension plans for their employees.

All of these moves are good, particularly those that might encourage more Americans to save. Some 70 million workers aren't covered by any pension plan. And the average account balance in 401(k) plans is just $37,000, and half of all participants have less than $10,000.

The key to any savings plan, of course, is to have enough money to set aside. Young workers often find themselves short of cash thanks to family obligations, credit-cards and installment purchases. And the younger a worker is, the less he or she is inclined to worry about retirement income.

In addition to good savings habits, many older Americans also learned the tough lesson of spending within their means. Going into debt for anything not absolutely essential was virtually unheard of a generation or two ago. Nowadays, consumer debt is a way of life for young workers who fulfill a desire to have things like new cars, expensive homes, cell phones and all sorts of costly electronic gadgets.

There is absolutely nothing wrong with wanting or purchasing any of these things. But two many consumers consider taking on debt to be preferable to the discipline it takes to do without and put a portion of their earnings into some sort of savings.

In addition to the benefits of saving, options like IRAs and 401(k) accounts also provide significant tax breaks. Even though the Senate let a similar bill die last year, the 407-24 House vote in favor of the proposed change should send a clear signal this year.