This is a contribution from Bud Hebeler who runs Analyzenow.com

USA Today had an article (4/11/08) that had a table showing that 49% of the people have saved less than $25k in the US. (And that doesn’t account for any of the debt on the other side of the ledger.) Even more disturbing, the table shows that 40% of those between 45 and 54 have saved less than $25k and 36% of those over 55 have also saved less than $25k. In the latter group, only $51% had saved more than $100,000. Find out more on this in http://www.ebri.org/files/RCS08_FS2_Saving.pdf

To give you an idea of the impact, a person who has saved $25,000 for retirement could spend only $1,000 of that per year (increased by inflation each year) for retirement and would not have money for emergencies. A person who had $100,000 at the start of retirement could spend only $4,000 a year for retirement. Yet, both my analysis and that of Fidelity Investments shows that a couple will need over $215,000 savings just to pay for Medicare Part B and a Medigap health policy.

I often cite the decline of national savings over the past two decades as an indicator of real trouble to come. This is just further evidence. There are going to be lots of babyboomers on welfare. This isn’t just a tax impact. It’s a huge effect on consumption and therefore industry and therefore on the economy, jobs and the stock market.

Incidentally, the article graciously mentions my Web site, www.analyzenow.com, but the site you should look at for additional perspective on savings statistics is http://www.ebri.org/files/RCS08_FS2_Saving.pdf.

Bud