Savings and wealth in the United States: trends and implications

As the debate over the future of Social Security in the United States begins to gather momentum, data suggest that many individuals are not heeding advice to increase personal savings. By its traditional measure, personal saving virtually disappeared in 1998. While there is some controversy over the measure, the dramatic decline points to changes in spending habits in recent years. There is little doubt that the robust economy and sharp rise in equity prices have played a major role in boosting consumption and the willingness of consumers to take on more debt. However, with individuals living longer, the data point to difficulties for many households in sustaining long retirements. This has implications for public policy, and the concept of forced saving should be part of any debate.