In news that should surprise absolutely nobody, the Federal Reserve Bank of St. Louis has recently issued an article written by “a senior economist“ who was floored to find out that many Americans still lack retirement savings. Comically, the Federal Reserve Bank of St. Louis is part and parcel with a central bank lead economic system that does nothing but encourage deficit spending and debt, and so the tone of surprising concern contained in the article sits somewhere between irony and total absurdity.
The St. Louis Fed found that:
Overall, 35 percent of U.S. households do not participate in any retirement savings plan.2
Even among those households that do hold retirement accounts, many of them have low account balances. Figure 1 plots the sum of account balances of all IRAs, Keogh accounts and pension plans by percentile for various age groups.3 The median (50th percentile) household holds only $1,100 in its retirement account. Even the 70th and 80th percentiles of households have only about $40,000 and $106,000 in their retirement accounts, respectively.
It also goes on to state that 35% of US households to not participate in any retirement savings plans. To make matters worse, even those households that do participate in these plans have incredibly low account balances.
In "additional details that stunned the Federal Reserve Bank of St. Louis and should be of no surprise to anyone who has been paying attention," income inequality among retirement savers is drastic, as they point out:
By contrast, the 90th and 95th (not shown in the figure) percentiles of households hold considerable amounts, at about $310,000 and $612,000, respectively. This implies a high degree of inequality in retirement account balances across households.
Even more hilarious is the perfunctory statement of concern at the very bottom of the article, expressing what seems like genuine remorse for the fact that American households may have lower retirement account balances than they should.
Still, this article documents that many households either do not utilize or underutilize retirement accounts, such as ESPPs and IRAs. It could be worrisome that, for many American households, the total balances of their retirement accounts may not be sufficient to ensure a solid life in retirement.
Has it not occurred to the Federal Reserve Bank of St. Louis that this lack of savings should be an anomaly if the economy has really "recovered" the way the Fed wants us to believe over the last 10 years?
Even sadder is the fact that the Federal Reserve Bank of St. Louis doesn’t seem to understand that the economic system run in the United States does not reward people who save, rather important people who speculate and spend beyond their means. What little balances are held in retirement accounts are likely now locked up in a stock market that is becoming increasingly volatile and could very well soon correct while the rest of the “cash on the sidelines“ continues to depreciate 2% annually from the Fed's objective of seeking information.
Thanks, Yellen! Keep those colors popped, Fed employees!
(Source: NY Fed Twitter)