CSPAN recently aired the Senate Budget Committee meeting for January 18, 2006. During the occasion Senator Ben Cardin (D-Maryland) questioned our Federal Reserve Chairman Ben Bernanke in regards to the dismal savings rate of the citizens in the United States, now at –0.5%. This is the lowest level of savings since the Great Depression. Naturally, the Great Depressioners have more of an excuse to go into debt because these were very difficult times. Massive layoffs and high unemployment helped drain the savings of those who needed the money in order to survive. You can hardly begin to compare a wrecked economy of old to that of today in which unemployment is near its lowest levels and corporate profits are at an all time high. We are not even in a bull market slump defined by the earlier portion of this decade through massive terrorist attacks and corporate scandals.

Go Here for more information on savings rate of disposable income.

Americans have no excuse for their spending ways. Most of us buy things we simply cannot afford because we always think that the grass is greener on the other side. In reality your neighbor next door is more than likely buried with debt and struggling to maintain that lifestyle he or she is accustomed to. What happens when Mr. X or Ms. Y retires and realizes there is little or no money? It is simply wrong to assume that the children or government should be responsible and called upon to step up to the financial plate. The chances of you having extremely successful offspring that are willing to pay for your retirement and are stingy enough to save is very slim.

We have an obligation to leave this earth in a better financial picture than what we initially inherited. This is an area I feel strongly about which why I will now revert back to the Senate Budget Committee. Americans in general have a propensity to not be trusted enough to save, especially for retirement and to remain financially solvent. Hence, there exists the need for a solution facilitated by the help of the government and businesses.

This is where Ben Bernanke brings up an excellent suggestion to the committee by first stating that starting today we can psychologically train people to contribute through a slight deduction of pay into their work’s 401k. Instead of giving employees the option to contribute, automatically have the individual set up for contribution and then give he or she the option to opt out of the plan. Studies have shown that more people are willing to continue their contributions and stay in the plan if they are used to not seeing the money in their paychecks to begin with.