* Dan Minette ([EMAIL PROTECTED]) wrote: > Well, I just plotted the yearly series from '59, which is: > > 1959 7.6 > 1960 7.3 > 1961 8.4 > 1962 8.4 > 1963 7.8 > 1964 8.8 > 1965 8.6 > 1966 8.3 > 1967 9.5 > 1968 8.5 > 1969 7.8 > 1970 9.4 > 1971 10.1 > 1972 8.9 > 1973 10.5 > 1974 10.6 > 1975 10.6 > 1976 9.4 > 1977 8.7 > 1978 8.9 > 1979 8.9 > 1980 10.0 > 1981 10.8 > 1982 11.2 > 1983 9.0 > 1984 10.8 > 1985 9.0 > 1986 8.2 > 1987 7.0 > 1988 7.3 > 1989 7.2 > 1990 7.0 > 1991 7.3 > 1992 7.7 > 1993 5.8 > 1994 4.8 > 1995 4.7 > 1996 4.0 > 1997 3.7 > 1998 4.3 > 1999 2.4 > 2000 2.4 > 2001 1.8 > 2002 2.0 > 2003 1.4 > 2004 0.8 > > I see a gentle rise from about 8% in '59-'63 to roughly 10% in '80 to '84 > range, with some structure during the '70s. Then between '84 and '87 there > is a fall to about 7%. And then a big drop from 1993 to 2004. It is true > that the average savings rate from '80-'84 is higher than it is from '71 to > '75, but the difference is only .3%, well within pure > statistics...(assuming that variations within the 5 year averages are > random and the statistical uncertainty for the 5 year average is the > year-by-year SD/sqrt(5).
Which is mostly irrelevant to what I said. You said the savings rate did not start to fall until the 90's. I pointed out that your comment was wrong. The savings rate started to fall in 1984-1985, from 10.8% in 1984 to 0.8% today. Surely you aren't disputing this with the data from the link I provided and you quoted right there? > > Incidentally, that is the time that the baby boomers should have been > > saving a lot for their retirement. > > Most folks save/saved for their retirement in their '50s and early '60s, I wrote. "...should have been saving...". And I was referring to the period 1985 to 2005, when savings rate was falling and the middle-range boomers were aging from 30 to 50. If they don't start saving until their 50's, most people cannot save enough for a comfortable retirement. That is why all investment advisers counsel starting to save as soon as possible, in your twenties or thirties. Assuming a 4% annuity rate, a retiree needs to save $300K in order to get an annual inflation-adjusted retirement income of $12K. If they start saving every year at 25 and have an average real return of 4% per year, they need to save $3K per year to get to $300K at 65. If they don't start saving until 50 and obtain an average rate of 3% (lower because they need to choose a less risky portfolio because they can't afford a big draw-down in their savings from a market crash), then they need to save almost $15K per year to reach $300K at 65. If their yearly gross income in their 50's is $60K then their after tax income is about $45K and they would need to be saving about 33% of their after-tax income. Today, when the middle of the boomer wave is turning 50, the personal savings rate is 0.8%. Either most boomers are expecting SS (or a defined-benefit pension, as you say) to pay for their retirement, or they are just not thinking about the future. > > My source was in a different part of that website: > > http://research.stlouisfed.org/fred2/data/PSAVERT.txt No, it is the same. I just linked to the graph, you linked to the ASCII data. > One final way to look at it is to look at the averages and SD over > time. Over the whole time, the average is 7.3+/-2.8 years. From '59 ^^^^^ percent > to '92, it is 8.8+/-1.2 yeas, and from '93-'04 it is 3.2+/-1.6 years. ^^^^ ^^^^^ percent percent And from 1959 to 1984 the average is 9.2% with a 1.1% SD. Then after 1984 the savings rate started to fall (1985-2004 AVG=4.9% SD=2.6%). I'm amazed you are arguing this. > I guess there are a couple ways of interpreting it, and I can see > eyeballing a big slide from the max in 1984 to the min in 1987 (3.8%). > But, it becomes much smaller if one starts at 1983 (2.0%), so that > measurement is dependant on the years picked. But, for the '90s > slide, you cannot almost cut the slip in half by moving the starting > point up a year. That is because there was a brief "notch" in 1983. However, if you look at the graph that I linked to http://research.stlouisfed.org/fred2/series/PSAVERT/112/Max and imagine going backwards in time from 2005 to 1984, you see only upward slope with a short plateau and more upward slope. If it were a mountain, no one would say the peak is in the 90's. The peak is in the early 80's. -- Erik Reuter http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
