Especially in recent years, an American with a steady job probably has sufficient income so that he can pay essential living expenses and also save something, if he wants to. His ability to spend less than his income depends more on his mental attitude than on the size of his income. To save, a person must have a motive strong enough to overbalance the pressure to spend all income immediately, if not sooner.
Some common reasons for saving are to meet unpredictable future difficulties, often called "a rainy day"; to pay for a college education for children; to pay for a home; to have an income in old age; and at death to leave something for dependents or descendants or other heirs. Among these reasons, provision for old-age income is the one that usually calls for much the largest accumulation of capital, through either a pension system or private saving or both.
Nearly every American, when his earned income reaches a quite modest minimum, gains a right to pension benefits, payable after he reaches a stated age and retires from his paid job. In addition, governmental assistance is available for needy people. This rather new and growing system in the United States is replacing the ancient custom of children taking care of their elderly parents.
But typical pension benefits are much smaller than earned income before retirement, so that for a worker without capital, the arrival of retirement day means a slash in living expenses. And when he dies, his widow must meet another big cut. Also, the pension benefit is usually a fixed dollar amount, so that the pensioner's buying power probably tends to shrink from year to year due to a rise in cost of living. So retirement is rough for him financially, and rougher still for his widow.
A worker, however, can spend all of his earned income before retirement and still expect that he and his wife will always have something to eat and wear, and a place to sleep, probably without going to the county poorhouse. A good many Americans seem willing to rely entirely on pensions and assistance from government or someone else to finance their retirement . To the question "Is saving worth while?" their actions show that, aside from compulsory savings for pensions, their answer is "No." If they understood the possible results of intelligent investing, some of them might conceivably give a different answer.
Let us turn to the people who do have savings. Ordinarily a person has nothing to invest until he first has mastered the knack of not spending all his income. He cannot become an actual investor merely by making a New Year's resolution that he will start to save money as soon as he gets his next raise in salary. Of necessity, an investor has already learned to be cautious as to how much money he spends. But it does not follow that he has bothered to learn anything whatever about choosing a place to put his savings.
Aside from paying for a home, the great majority of savers limit themselves to fixed-price types of investment, including life insurance, savings deposits, and savings bonds. In dollars accumulated, such investments may look passable; but a saver finds that after many years of effort, including reinvesting all income from savings, a rise in cost of living has caused his capital to have far less buying power than he had expected. So he may well wonder whether saving was worthwhile, but savings is always worthwhile even if it doesn't seem so in the short term.