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The Not Yet Gazette is a fictional newspaper showing one possible future. The stories in the paper reflect major demographic trends projected for Minnesota.
From the Desk of the Marketplace Editor: Why Savings Are Going Up
Business and Economic News
Who says people do not learn from the experiences of others? The high savings rate we have seen for the past 15 years shows that young people have learned from the dismal experiences of their parents and grandparents. High poverty rates among people in their 70s and 80s, many of whom are short of money because they did not save enough or did not receive a high enough rate of return on their investments, have provided a sobering example for younger adults.
Back in the 1980s, financial advisors told people they would need to save about $600,000 per single person or $1 million per couple to supplement standard retirement plans. This meant they needed to start saving in their 30s, investing $300 to $500 per month in funds returning 15 percent or more. Many never did this. This is why we see so many old people working at menial jobs or living in ElderDorms.
The younger generation is doing a lot better. They are far more conscious of the need to build ample savings. There is a down side to all this, of course. Slow growth in the retailing sector has been traced to the higher rate of savings. Many people have had to forego having a second or third child to make sure they save enough for retirement. And the high savings rate means less money is available for supporting parents and other needy relatives.
Not all younger adults have responded by saving more, of course. Some have taken the opposite direction, adopting a hedonistic, "grasshopper" strategy, based on an assumption that since they will never be able to save as much as they need, why should they bother? The grasshopper label derives from a folk tale about frittering grasshoppers and hard-working ants; the grasshoppers of today are the people hanging out at the clubs, drinking and smoking and spending every last dollar. These are the same people who will be living in ElderDorms and on the street in the future. (Trends: aging, rising dependency ratio)