Though the household savings rate has improved since bottoming out in 2003, they are still well below typical historical levels. After reaching a high of nearly 15 percent by the 1980s, there has been a steady decline, which hit a modern low of -2.7 percent in 2003 (Statistics portal 2009). The level has remained low and has shown no correlation to the rate of GDP growth during the last 30 years (Statistics portal 2009). However, the declining rate has a significant correlation to the personal debt to income ratio, as "in the 1980's, the average household owed less than $50 in debt for every $100 in income. In just 15 years, the ratio has tripled to almost $160 in debt for every $100 of income" (Gilbert & Disney, 2007, p.1). People are using disposable income to pay down and manage their debt, and there are little left for saving.
Individually there are numerous reasons why an individual may choose to put some money aside, or fail to save anything. However, as a population there are some trends. Almost 75 percent of the people that make less than 20K per year had any savings, and this figure increased with income reaching 95 percent for those making over 60K (Harris, Loundes, & Webster 2002, p.209). ...Show more