This article takes a deeper look at how Americans view their future retirement, and also inquired about their plans in order to reach that goal. According to a study done by the Employee Benefit Research Institute people are in general more confident about being able to afford a comfortable retirement than they were a few short years ago. Although this is very good their is a strange side to it. It appears that even though people are more confident it appears that the proportion of people saving for retirement has also declined over the past couple of years. Half of workers have not even tried to figure out the amount they need in order to retire. If the saving rate has fallen among these individuals why are they so confident? One factor behind the boost in confidence seems to be the rebounding of the housing market. This could be a good indicator the article notes since people are more likely to own a home than other assets such as stocks. This would lead me to believe that workers are not more comfortable due to any actions on their own accord. They feel more comfortable about the economic environment around them which is leading them to higher confidence in their retirement prospects. I think it is interesting that people can feel more confident even if they are doing less to support their retirement.
http://www.bloomberg.com/news/articles/2016-03-22/fewer-of-us-save-more-are-confident-of-retirement-are-we-crazy
Does this article mention anything about an increase in consumption? This change in saving for retirement must have some implications on the level of personal consumption. An increase in consumption could lead an increase in investment. This could ultimately lead to an increase in price levels and accelerated inflation.
ReplyDeleteThis article does pose an interesting idea about the way that consumer confidence can play a role into the economic activity and the choices that consumers make based off of these beliefs. To me, it is somewhat concerning, however that so many people are lacking the general knowledge of the funds necessary for a retirement since they are relying on only their gut feelings and expectations. With the confusion over the future of social security accompanied with the inability for someone to really see where his or her life may go by the time retirement is reached, these create added concerns for me that people may just be too optimistic at the time being.
ReplyDeleteIt is intriguing to compare peoples beliefs or expectations with the surrounding economic environment to see if they are the same. As we have seen it can be a self fulfilling prophecy in some ways. Although, just because we are confident about something doesn't mean we are actually going to save or do things that make it come true. I figured because of social security shrinking that people may assume it's going to be tougher for the generations following the baby boomers to receive good support. But I am not sure what the discussion is nowadays regarding that, or if it has changed at all. I guess we will see...
ReplyDelete