Savings and Weath in Old Age Essay Example | Topics and Well Written Essays - 2250 words

Savings and Weath in Old Age - Essay Example The government is responsible in setting up policies that will help individual to accumulate resources that will aid them when they reach the retirement age or old age. For this reason one finds pension policies, taxation policies, housing policies and policies that govern homes where the old can live. The economy of America depends on the saving behavior of the people. To come up with this kind of behavior, one has to look at the patterns at which people are saving or view savings. Patterns of saving reveal the economic conditions of a country. High savings mean that individuals have high disposable income thus their living standards are better (Graham et. al., 2003). The saving rates of Americans have lately decreased to 5.3% from 7.6% annually. This is because very many Americans have a problem with household debt which has been on the increase. This is because Americans are spending more money in purchasing things that are essential for their existence. There is the problem of the wealth effect where the more an individual owns the more he or she needs to pay for it. The taxation policy really discourages savings and thus when such a wealthy person gets old; they have nothing to spend because he or she spent it securing the wealth. This reduces the accumulation of wealth for usage during the old age (Graham et. al., 2003). For the past ten years, there has been a great... People can quickly acquire liquid cash easily than before. This is increasing the inflation rate thus making things become more expensive and savings reducing completely. When one spends time purchasing goods and services for the use of that particular time, then it means that they have no more cash to keep for later use or for emergencies. Thus wealth is not accumulated and its abundance is a long gone story. This is a negative impact to the people because they have nothing to sustain them when they reach old age (Paul M. et al., 1996). Since the government sets the particular policies that affect the savings behavior of the people, it has the responsibility of coming up with public policies that will increase national savings. These can only be done by making good public policies. It can first of all make contractionary monetary policies to control the circulation of liquid cash within the economy. This will reduce the amount of liquid cash that is circulating within the economy. The action will reduce inflation by making money become scarce to the people. Thus expenditure in goods and services will reduce prompting people to save more (Paul M. et al., 1996). Savings can not be done by the government alone. Americans need to balance their purchase of things to enable them to save for their future which is mostly old age. These can be done through campaigns that are being used to educate individuals against high rates of purchasing. They need to learn to purchase the most important things and leave out those that are less important (Paul M. et al., 1996). The taxation policy by the government is a complete discouragement to saving by