Retirement savings: the million-dollar myth explains why consumer demand not rebounding

In her Guardian column, Helaine Olen discusses how in today's low interest rate environment, $1 million in savings is inadequate for retirement.

This is a very important point because it triggers what your humble blogger has called the Retirement Plan Death Spiral.

Individuals saving for retirement or in retirement understand the million-dollar myth and are reducing their current consumption in response so they don't run out of money while they are retired.

This creates the interesting situation where central banks are trying through low interest rates to get individuals to loosen their purse strings and spend while at the same time individuals are cutting back their consumption to offset the loss of income while they are retired on their retirement savings.

As Japan passes the 2+ decade mark and the EU, UK and US pass the half decade mark, it is clear that individuals preference for not running out of cash when they retire overwhelms their urge to spend because central bankers keep rates low.