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THINK OF IT AS THE ultimate financial Rorschach inkblot test. When you hear about the pitifully inadequate retirement savings of so many Americans, what’s your immediate reaction?
a) This is the inevitable result of stagnant wages coupled with soaring medical, education and other costs; or
b) This is what happens in a financially illiterate society with scant self-discipline and constant temptations to spend.
For me, these differing views were brought into sharp relief by two recent articles on HumbleDollar. In May, a frequent contributor to the site, Richard Quinn, wrote about 16 ways that Americans waste money. It easily ranks as the most popular article in the site’s 31-month history.
The other blog post came from Dennis Friedman, another frequent contributor. In late July, Dennis wrote that there were economic reasons for our lack of savings—and scant evidence that Americans were wasteful in their spending. That piece probably sparked more comments that any other HumbleDollar article.
In our increasingly divided and tribal society, this clash of views perhaps isn’t surprising—except it cuts across the new political alignment. Working-class voters are struggling to save and yet they appear to be increasingly drawn to the Republican party, traditionally a vocal advocate of self-reliance. The middle class are faring better financially and yet they seem increasingly to favor the Democrats, the party more inclined to ascribe individual financial struggles to societal forces.
Who’s right? My inclination—an uncourageous one, I admit—is to answer, “All of the above.” I find some of the criticism of specific spending a little silly. Can all our family finance problems really stem from lattes and avocado toast? In 2018, 5.2% of Americans’ spending went toward food and booze at restaurants, according to Commerce Department figures. That might sound like a lot—but it’s barely higher than 50 years ago, when 5.1% of spending went toward eating out.
Moreover, there are good reasons Americans are finding it harder to save. Many folks point to a Pew Research Center study, which noted that today’s average hourly wage has the same purchasing power as it did in 1978. The waning of the American savings rate has roughly coincided with this stagnation in real wages.
To be sure, you can quibble with the Pew study. For instance, even if the purchasing power of wages has stayed the same, the quality of what folks get for their money may be significantly better. Think about the improvements in medical care and the advances in technology over the past four decades. It may also be that, even if average real wages are stagnant, folks still enjoy rising real wages as they advance through their careers. That means their ability to save should improve over time.
But there’s a more fundamental issue with the macroeconomic explanations for our 
lack of savings: We all know people on modest salaries who manage to save. It may not be easy—and, indeed, it may be harder than it once was—but it clearly can be done.
In the final chapter of my 2016 book, I mention my paternal grandfather, whom everybody called Clem. He was born in 1905 in working-class London. He left school at age 12 and joined the post office, where he sorted mail. Thanks to a stint at night school, Clem landed a clerical job in the Civil Service, where he worked for the rest of his life. Eventually, he came to enjoy the comforts of the middle class.
Still, Clem considered himself a socialist. He understood that poverty was a breeding ground for all kinds of social ills. But he would often add, with a slight tilt of his head for emphasis, that, “If anybody should have grown up to be a criminal, it was me.” Clem’s message: Poverty may explain crime. But it doesn’t excuse the behavior of any one individual.
The same is true of managing money.
Yes, there are all kinds of economic and cultural explanations for today’s lack of retirement readiness. As a society, we would be better off if high schoolers were required to learn about personal finance, if there was greater skepticism about the benefits of spending, if we could foster a culture that valued savings, if we could encourage folks to stay in the workforce for longer and if we could incentivize employers to retain them.
But these sorts of changes take time—and, meanwhile, every day retirement draws closer. There may be plenty of excuses for why folks aren’t saving enough for retirement. But those excuses can’t be traded for cash. Instead, we need to save ourselves—and that means saving money, no matter how much of a struggle it is.
Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Whither Vanguard, Thinking Out Loud and Balancing Act. Jonathan’s latest books: From Here to Financial Happiness and How to Think About Money.
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I would add pensions and credit cards The wages earned years ago came with pensions so the wages today pale in comparison to those that also provided a retirement income. (Of course with a pension savings are less necessary.) The proliferation of credit cards makes spending too easy. If you can’t pay off the credit card bill at the end of the month you couldn’t afford to buy it. Loan sharks always win.
Pensions did make a huge difference – all my inlaws have state and local govt jobs – they blow every penny and were/are in debt. But several have retired with their steady pension and ss checks – and are still doing fine, despite decades of financial irresponsibility.
I worked in the private sector and never had access to a pension, plus my generation gets shafted with reduced SS benefits – so not even getting our fair share based upon what we paid into the system. Zero safety net. I knew I either had to save or it was cat food for me.
In order to save you have to have something left over at the end of the month after paying for necessities like housing, food, utilities, transportation etc. Many people don’t.
I was fortunate that I was able to save. Whenever I would get a raise, I would direct most of the extra money toward savings, rather than increased spending.
It’s all about living below your means.
The number one problem area is high dollar items, not lattes. People buy new cars, subscribe to expensive entertainment and data plans and buy the most expensive homes their banker says they can afford or rent upscale apartments when a standard apartment will do nicely. I see it every single day. $1000 smart phones…you’ve got to be kidding me.
To that list I would add expensive vacations and eating in fancy restaurants more than once a week. It adds up over a year.