Teach kids the value of restraint

Everything parents try to do now to teach their children to save money for the future gets shouted down by the bad economy, credit problems and encouragement at every turn to enjoy now and spend.

It's like trying to teach kids not to smoke when all of their peers and every adult they know is puffing away and couldn't care less about the exorbitant costs in money and illness of using tobacco products. The trend of people not saving for the future is negatively affecting families.

A recent report from the Employee Benefit Research Institute found that one-fourth of U.S. workers have saved less than $1,000 for retirement. Workers are unprepared to maintain their standard of living once they retire.

Consider that baby boomers and their offspring generally exercise less, eat more and suffer a greater rate of obesity than previous generations.

Baby boomers save less on average than our parents did. Generations Y and X are following us with shallower footprints. It looks as if our kids' will have a lower quality of life. They also aren't expected to live as long.

Our kids shouldn't bank on Social Security or Medicare. Our adult kids are paying into each just as baby boomers are, but it is less likely the programs will be around for them just as the entitlements are questionable for the 78 million baby boomers.

Already baby boomers are draining the federal swamp. Social Security is projected to pay out more money this year than it receives in payroll taxes. That wasn't supposed to happen until 2016. Even so, the program will not exhaust its funds until 2037 unless changes are made sooner.

Individual savings and investments may be our kids' only salvation. I opened bank accounts for my daughters and I got them into the habit of putting a few dollars regularly in the bank so they would get used to saving.

The money, I told the girls, would be safe and earn interest. They could watch it grow with each statement.

That worked in the 1980s. Less so in the 1990s, and abysmal interest since 2000 has made liars out of parents like me. Ubiquitous advertising in the media encourage people to spend and not to worry about tomorrow. ATMs and credit cards given to teens make spending easier and more appealing.

An Associated Press-GfK poll found that the average amount owed on credit cards is $3,900, down from $5,600 in the fall. People on average carry about $44,000 in debt from credit cards, mortgages, auto loans and other consumer debt.

Fewer people are saving, and a record number of bankruptcy filings keep occurring. High unemployment adds to the problem. So do health issues.

Personal savings is the only way to feel secure. But first, the trends of non-savings have to be reversed. According to the Employee Benefit Research Institute, about one-fourth of workers this year said they have $1,000 to $25,000. Another quarter said they had $25,000 to $100,000.

Only 11 percent of the public had saved $100,000 to $250,000, and another 11 percent had squirreled away more than $250,000. A falling number of workers said they were very confident about their financial stability in retirement.

If an emergency arises - and they always do - people with no savings may have to rely on payday loan services, and the cost of doing so is enormous. Saving for the future is a way to keep from going deep under financial water.

Workers would be wise to redouble efforts to save for retirement. Some thought I was crazy in the 1970s, but I never expected Social Security to be around by the time baby boomers need it.

If it is still around, I am sure the age requirement will place it out of reach just when people my age turn 66 in 2021. The same is likely to be the case when my daughters each hits retirement age.

That makes it imperative for them as well as boomers to save for the future. Interest rates won't be an incentive. But saving for old age is.

Contact Diuguid, a member of The Kansas City Star's Editorial Board, at Ldiuguid@kcstar.com.