NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, January 17, 2014

Americans’ lack of savings has become a crisis. Our confidence that we’ve got enough saved for retirement is at historically low levels, according to the Employee Benefit Research Institute’s annual Retirement Confidence Survey. More than a quarter of Americans have saved less than $1,000 for retirement. Only half of those surveyed say they could definitely find $2,000 if an emergency arose in the next month.

Our society tries to push people to save. Various incentives make it less painful. But since they largely rely on the tax code or employer-based savings plans, they don’t reach a large percentage of Americans — the very people who need to save most and find it the most difficult.

There is a financial product, however, that Americans use enthusiastically, especially the people who most need to save: we buy lottery tickets.