Once a land of savers, America is now the home of the thriftless. Americans’ personal saving rate, in steady decline over the last quarter-century, finally plunged into negative territory this year. No surprise there. In modern America, the struggle between debt and saving is a rigged contest.

It’s never been easier to borrow — credit cards, subprime home mortgages, home equity loans, payday loans. But when it comes to saving, about half of American workers, including more than 8 million Californians, are denied the opportunity to save the way people save best: on the job, through payroll deduction to a retirement plan. That is a critical problem. Retirement saving is one of the twin pillars, along with homeownership, of household wealth and security. With home equity declining — for the first time ever, Americans’ equity in their houses has fallen below 50 percent — money tucked away in pensions, 401(k) plans and individual retirement accounts has become, in aggregate, the largest item on household balance sheets.

The retirement savings system works reasonably well for well-paid workers and large businesses. ... But for workers in the bottom half, many of them working for small businesses that offer no retirement plan, the news is bleak. Under the current system, more than one-third of the young Americans will reach old age with no retirement savings at all, the Government Accountability Office projects.

And because retirement savings also serve households as fail-safe protection against emergencies such as illness, disability and death, the inability of many workers to save through their jobs leaves them vulnerable throughout their lives.

newamerica.net