Why save?

Unfortunately it is not a retorical question. I am continually amazed at the low level of personal savings in many (mostly western) countries - in some countries the savings rate is close to or even below zero. Don't people (as a group) actually think about how they will sustain their standard of living once the paychecks stop coming in?

Traditionally there have been four alternative sources of funding a person's retirement:

1. government (i.e. the taxpayer);
2. employer (either by contributions made during the term of employment or promises to provide at a later date);
3. family members (typically children);
4. personal savings.

There has been enormous coverage of the demographic factors that will make it increasingly difficult for goverments in a number of countries to continue to provide the same level of retirement benefits (including health care) to future retirees as are enjoyed by current retirees. Even if the current level of retirement benefits can be considered adequate (not even close in my view), my expectation (which I believe is widely shared) is that the value of such benefits will materially deteriorate in the future.

There has also been commentary about the widespread underfunding of company sponsored defined benefit pension plans. Since I do not get to participate in one of these, this is not an option for me anyway.

Reliance on family members? No thanks. While traditonal in many cultures, I would prefer to rely on my own efforts rather than impose a cost on my children.

That leaves personal savings as the only viable (or available) alternative.

The conclusion seems unavoidable. Either I rely on myself through savings or investment or face the prospect of a declining standard of living once I leave full time employment.