Disposable Income or Misconceptions on Savings and Spending after Taxes

​Marketing needs customers that can afford to buy.  Unfortunately, the target audience can often be people that forgo savings so that they can spend.  Interestingly, this tendency to overspend or what used to be called spending beyond one’s means is often blamed on marketing. That may be one example of ‘marketing insanity’.  The evidence points to other causes such as easy credit (consume now and pay later) Getting Out of Debt and perceptions about cash flow (buy now your income will always go up in the future) Perceptions of Income Growth Improve Housing Prospects.  A related impact to lower savings is the progressively increasing tax rates of federal income, social security related taxes, state, and local How Taxes Reduce Savings. This is called the tax burden.
 
Recently there have been a series of news articles that want to reinforce perceptions of wealth decline.  Primarily they have relied on some dubious claims of disparity of savings across generations.  I read these types of articles with dismay because first they are inaccurate and second the inaccuracy appears to be intentional with that intent to promote an agenda.  The classic, hidden agenda.  And more challenging is these same inaccurate articles are copied and further distributed by traditional and wide-spread media outlets.
 
Let’s look at some of the recent headlines and then debunk some of the Headlines. Millennials Less Wealth Versus Boomers.  Contrasting this article is 25 % of Millennials Report $100,000 in Savings.  Which is correct.  Well they both may be right in their own way but the second is more accurate.  The claims of overall savings disparity (oh and by the way the same claims are made for income disparity) rely on reporting total generational savings.  Well, that is misleading as the baby boomer generation is generally figured at 76 million and the millennials generation in these articles is limited to 70 million.  Even equal savings per person will show Millennials lagging Boomers. 
 
Not surprisingly, the closer look at the numbers reveals not much has changed across the generations.  That may be reflected in the new report that 25% of Millennials have over $100,000 in savings compared to just 18% in 2018.