Spend Now, Save Later?

The last time the nation couldn't save a dime, it was an era of mass joblessness.

Now unemployment is near record lows, yet according to the Commerce Department, the savings rate for 2006 hit a low of -1 percent. For many American families savings have become a luxury they simply cannot afford.

"Salaries aren't keeping up with inflation is the bottom line. Gas alone is killing your savings," one person told ABC News.

Cindy Taylor said she wishes she could save more, but at age 44 with a family, a mortgage and credit card bills to pay she must spend everything she earns as a college secretary on her monthly budget.

"I do have a son going into college and that's an ongoing expense," Taylor said.

She said she also has a daughter and as a single mom it's "difficult." She's now thinking about working weekends so she'll have something to put aside.

"I know if I don't do something drastically to change now with my finances, you know what's going to happen when I approach retiring? I won't be retiring," Taylor said.

"I think many of these middle income households feel very stretched," said economist Mark Zandi of Moody's Economy.com. "They have to borrow and they have to spend beyond their means … they have to have a negative savings rate."

Choosing Not to Save?

The surprising thing is it's not just Americans living paycheck to paycheck who are driving the rate into negative territory. Affluent Americans are also saving less.

"They've enjoyed some big returns on their stock portfolios, on housing values, on almost everything they own and the result is that they feel prepared for retirement," Zandi added.

Homeowner Bebe Flynn stopped saving over the last couple of years because her money was in real estate.

"The house, happily, has quadrupled in value," Flynn said. "It really is my nest egg."

It's a risk, because that's not exactly money in the bank. But rising real estate values and a rising stock market have made many Americans feel like they're saving.

Government figures show that during the last 25 years as the savings rate dove, the average net worth of Americans doubled to $425,000.

So while there is no immediate crisis at hand, down the road Americans who are not saving now for retirement will have to get serious about putting money aside. And when they do, they're going to take a lot of spending power off the table, which could slow the whole economy.