Federal Reserve Bank Chief Ben Bernanke said on Wednesday there is a need for U.S. consumers to save more money. However he added that no silver bullet has yet been found for a way to increase household savings.
Speaking at the Washington Economic Club, in Washington, D.C., Bernanke noted the need to increase national savings as the aging population will be the most important factor shaping the U.S. economy and society in coming decades.
The first members of the baby-boom generation will reach the minimum age for receiving Social Security benefits in 2008.
Besides tax increases, spending cuts, or reform of the major entitlement programs, the fourth possible fiscal response to population aging is to accommodate a portion of rising entitlement obligations through increases in the federal budget deficit, Bernanke said.
Preparation for the impact of these demographic changes must start quickly, he urged. A simple way to do this, he suggested, is to change the 401(k) retirement plans within a company to allow new employees to be enrolled automatically, may help consumers save more.