THE SAVING RATE in the United States increased tremendously over the past two years as families cut back on spending while putting away excess funds from stimulus payments or other sources. While one estimate suggests that the “excess personal saving” has been as much as $2.7 trillion, many families are expected to work through those funds this year, while the nation reverts to traditional rates that have been low since the early 1960s. Alicia Munnell, director of the Center for Retirement Research at Boston College, says that studies early in the pandemic indicated that the first stimulus checks largely were used by families to pay essential bills. The second and third rounds of stimulus allowed many to pay down debt and to save some of the money. “Saving certainly did spike up at the beginning of the pandemic,” Munnell says, adding that the Center is doing additional research into the trends. So far, it appears that the increase likely won’t have a long-term effect on retirement plans. “We always have had a low rate of saving in this country, and it seems like we are back down to our traditional rates.” In a January report, Moody’s Analytics estimated that those in the bottom 40 percent of the income distribution had about $350 billion in “excess personal saving,” which the economic research company defines as the difference between actual saving and saving that would have occurred without a pandemic. In total, the excess saving nationwide was about $2.7 trillion. On the other hand, Moody’s also estimates that many of those families in the bottom 40 percent will have to spend their money this year. And statistics from the Bureau of Economic Analysis also show that saving rates have returned to historically lower levels since spiking during the pandemic. Saving Increases Nationwide Experts Explain How Reverse Mortgages Fit Into Saving Trends By Thomas A. Barstow Alicia Munnell 24 REVERSE MORTGAGE / MAY- JUNE 2022
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