>Some of them quit just so they could spend their retirement money now.
I have seen it for myself. This also with a ten % penalty for early withdraws and the taxes due because the assets being pre-tax. Both my parent had to go through the depression with their parents. Thus the precautionary reason in the snip below.
We have not had to go through a depression. Some say a credit crunch is coming again. I think many of americans spoil their kids, myself included. This does not make for a good example for saving.
We are generally not known to be a nation of savers.
Snip>Motives for Saving
The famous life-cycle model of Nobel Laureate Franco Modigliani asserts that people save—accumulate assets—to finance their retirement, and they dissave—spend their assets—during retirement. The more young savers there are relative to old dissavers, the greater will be a nation's saving rate. Most economists believed for decades that this life-cycle model provided the main explanation of U.S. saving. But in the early eighties Lawrence H. Summers of Harvard and I showed that saving for retirement explains only about one-fifth of total U.S. wealth. Most of U.S. wealth accumulation—the remaining four-fifths—is saving that is ultimately bequeathed or given to younger generations. The motive for much of the substantial flow of bequests and gifts from older to younger Americans is surely altruism. But a large component of the bequests may be involuntary, and simply reflect the fact that many people do not spend all their savings before they die.
In recent years a much larger fraction of the retirement savings of the American elderly has been annuitized. That is, the savings take the form of company pensions or Social Security that pay regular checks until death, with no payments after the person dies. Having one's retirement finances come in the form of an annuity eliminates the risk of living longer than your money lasts. One possible result of the increased annuitization of retirement assets may be that people, especially those who have already retired, have less incentive to save more in case they "live too long."
That precautionary motive is one of the key reasons people save. Besides the risk of living longer than expected, people save against more mundane risks, like losing their jobs or incurring large uninsured medical expenses. Computer simulation studies show that the amount of precautionary saving can be very sensitive to the availability of insurance against these and other kinds of risks. For example, one such study that I did shows that the failure to insure low-risk, but high-cost, health expenditures such as nursing-home care can lead to a 10 percent increase in national saving.
Another issue related to motives and preferences for saving is the role of the rich in generating aggregate saving. Do rich Americans account for most of U.S. saving? Not really. Relative to their incomes, some of the rich save a lot, and some dissave. So, too, for the poor. As Donald Trump will tell you, there is considerable mobility of wealth in the United States, at least over long periods of time (see Human Capital). The fact that the ranks of the rich are continually changing suggests that some of those who are initially rich dissave and dissipate their wealth, while others who are not initially rich save considerable sums and become rich.
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