.On 2010-01-24, F George McDuffee wrote:
On Sun, 24 Jan 2010 15:27:13 -0600, Ignoramus12856
wrote:
snip
Wes, I agree that saving money is essential for anyone, and people who
do not save, fully deserve a fair amount of trouble. I do personally
save a fair amount of my income.
snip
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This appears to be a correct statement.

It is also an area where I think the FRB has some sort of hidden
agenda. [see other thread on this] By setting the interest rates
so low, the interest rates paid on most forms of liquid savings
[gold not included] are now and have been *NEGATIVE* for several
years, when inflation and tax effect are considered.

There are two reasons to save:

1) To create investment income
and
2) To provide for a rainy day.

Item 2 is important even if the saver is not paid for deposits.

What is rational about saving so the banks and or government can
use your money and charge you for the "service?"

So that you have money when you need it?

The other problem is how much savings are "enough?"

Consider that the median U.S. family income is now about 50k$/yr.
When inflation, and especially loss of benefits such as defined
benefit pension plans, fully paid employer medical and job
security are considered, the median income has been *FALLING* [at
an increasing rate] for the last 30 years. Some of the less
perceptive insurance companies were publishing studies showing
that to be on the safe side, the typical couple should have about
1,000,000$ in savings when they retired. Just how is it possible
that the typical couple could accumulate 20 years of pre tax
income over even a 50 year working life? [20-70] especially with
*NEGATIVE* savings interest?

It is not possible for everyone to be above average.

For retired people, a million goes a long way, in addition to Social
Security income and with the residence paid off.

For a working person, a million dollars is no longer a way to live an
extravagant lifestyle.

i