Baby Boomers Are Fated To Fatten Up Their Piggy Banks

Many economists believe that savings patterns inevitably change over one's lifetime. The so-called life-cycle theory of savings holds that when young people are thrust into adulthood, they spend more than they make, borrowing huge sums to pay for homes, furnishings, and cars. With the onset of middle age, these spendthrifts begin saving more as retirement comes closer and so do bills for college education.

Now, there's new evidence to support this demographic theory of savings. According to a recent survey by the Employee Benefit Research Institute and the Gallup Organization, more Americans overall would prefer higher cash salaries or convertible company-owned stock than a boost in their employer-provided retirement benefits. Those favoring bigger paychecks or company stock awards outnumber those wanting more retirement benefits by 52% to 46%. But the percentages change dramatically depending on age. Among those aged 18 to 34, 29% preferred cash, but just 15% of those aged 55 and over wanted the immediate reward. These results "reinforce the often stated belief that savings rates will increase as the baby boom generation ages," says EBRI President Dallas L. Salisbury.

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