Max Baucus: “The American people, we all know, have many wonderful qualities but one of them, unfortunately, is not personal savings.…”

“The American people, we all know, have many wonderful qualities but one of them, unfortunately, is not personal savings. People in other countries save more personally than do Americans. It is a concern many Members have. A lot of Members want to use the Code to encourage personal savings, and many provisions do so. During the last 20 years, personal savings rates in our country have consistently declined from a peak of under 11 percent of gross domestic product in the 1970s and the 1980s to zero or negative today. Why does this matter? A low savings rate means people are not putting their own money away for retirement. Social Security is helpful. We have other private savings provisions such as IRA accounts which are helpful, but the third leg of the retirement stool is pensions. The more people have in pensions that they can rely on for retirement, the more it will help. That means, importantly, less dependency on Social Security, which many Americans are too dependent upon. Sixteen percent of today's retirees rely exclusively on Social Security benefits for their retirement income.”