Make every child a trust fund baby
In 2015, more than half of American households had negative or zero savings. For households with incomes less than $40,000 per annum, 68 percent spent more than or the equivalent of their incomes. That proportion fell to 44 percent for households with incomes between $40,000 and $100,000, and dropped further, to 32 percent, for households with incomes greater than $100,000.
These figures from a Federal Reserve Board report show how both the share of savings and the amount of savings out of personal income rise as individuals’ income and wealth increase. It also helps illustrate why economic inequality in America is continuing to grow.
In our country, savings activity leads to an uneven spiral – where those who start with more wealth initially attain greater wealth over their lifetime. And their initial endowment of wealth is a consequence of transfers of resources across generations – from parent to child and from grandparent to grandchild.
Read the full op-ed here.