| Rethinking retirement in tough times |
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Widely available consumer credit and increasingly sophisticated marketing campaigns fostered detrimental changes in consumer spending habits over the past several decades, according to a March personal savings analysis by EBRI. In more recent years, the run-up in real estate prices gave consumers a false sense of instant wealth, which deterred personal saving.
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| Retirement attitudes |
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"All of a sudden everybody's got to have the latest in electronics, everybody is getting a big home and every kid has to have a car in high school," Hebeler says.
Generational differences
Over time, the thrift of the silent generation took a backseat to the splurge mentality of baby boomers, Generation X and now the millennials.
Kevin Reardon, a Certified Financial Planner based in Brookfield, Wis., contends that the savings problem is a generational issue largely facing baby boomers and their children.
With the exception of a few upticks in the '70s and '80s, our national savings rate declined steadily from a high of 26.1 percent in 1944 to roughly 0.4 percent in 2007, according to the U.S. Bureau of Economic Analysis.
"I point to lifestyle as far as that goes," Reardon says. "They're (baby boomers) choosing the nicer car and the higher lifestyle versus saving money."
Eventually it hits home. "All of a sudden they walk in and say I'm 50 years old and I need to get on track," he says.
Retirement savings killers
Credit cards
Despite growing concerns over the economy and lackluster personal savings, Americans love to use their plastic.
And our debt levels continue to climb. Credit card debt stood at $957 billion in April, up from $770 billion in 2003, according to the Federal Reserve Board. In 2003, the average American carried $7,041 in revolving and nonrevolving credit, which includes car loans and other forms of debt but does not include mortgage debt. Today it's $8,438.
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