Saving for a “rainy day” (Photo by John P. Flannery)

A recent poll said that 40% of our friends and neighbors have made their New Year’s resolution – to save more – in savings accounts, automatic transfers, savings bonds, and certificates of deposit.

We once did save at a decent rate.  Our national saving rate was 12.2% in November 1981.  But the rate fell like a stone starting in 1982 and went as low as less than 1% a number of times between 2000 and 2010.  Easy credit meant you didn’t have to save – so some wrongly thought.

The rate climbed back up when the 2008 recession hit, going from 1.3% in January 2008 to 4.2% in December of 2009.

The latest report from the U.S. Department of Commerce, from the Bureau of Economic Analysis, says our current rate of savings is an anemic 4.2%.

The dilemma for families that want to save is that they likely owe in debt at a higher interest rate than what they can get saving their money.  From 1990 to 2008, the nation’s citizens were convinced, Benjamin Franklin’s advice to the contrary notwithstanding, that being a borrower was not so bad.  Unfortunately, if a nation’s citizens don’t save, then the nation has to borrow from other nation-states who do save.

If you haven’t checked lately, the return on a savings account is not that much more than if you just hid your money in a mattress.

Nevertheless, the best advice is to save for that rainy day – what we were taught in High School.

One economic theory on savings is to save while working to smooth consumption during retirement – that metaphorical “rainy day” that trumps almost all others.

What’s quite alarming is that a typical working age household has only $3,000 in retirement account assets.  Even a household near retirement, and that’s about 38 million people, who have no retirement account at all (no IRA, nor 401(k)), has saved only about $12,000.  The median savings for people with a retirement account is $100,000, but that larger sum won’t go that far for our graying population retiring at age 67.  The Center for Retirement Research estimates that the gap in savings needed to retire and the savings in hand nationwide stands at $6.6 trillion.

Before anyone goes blaming folk for not saving, there’s a lot that can make you choose to spend and not save, an uneven ability to earn (in a changing market), worse than that, unemployment, disability, disease, the lost value of real property as an asset to leverage your resources (remember 2008 when many discovered a house does not always appreciate in value), an employer’s failure to make good on a pension retirement fund (promised and then withheld), not to mention the drive among some elected “hot shots” to cut federal and state retirement payouts (after the fact), reducing anticipated payouts in social security, as well as questionable cuts proposed for Medicare and Medicaid.

Nor is our government making saving easier.  You all know how the feds have discussed eliminating the mortgage interest deduction – as if it wasn’t enough that the bank crisis devalued the asset many relied on to “smooth” their glide path toward a secure retirement.

The feds are now looking at cutting back on 401(k)s as a tax deduction to reduce the deficit (no thanks to the Simpson-Bowles bipartisan commission).

If retirement is the biggest and longest “rainy day” in our lives, we have to save more, but those of us in the middle class also have to protect the mortgage interest deduction, retirement accounts, federal and state retirement programs, social security, Medicare and Medicaid.

We also have to fight for our fair share in wages and salary of the profits we make possible for the so-called “job creators” who are long on excuses for making few new jobs and hording what they get in profits.

We also have to question imperial wars abroad that compromise our nation’s ability to invest and grow at home.

In the bargain we shall not only save for our own retirements, we might just save the nation.