Among the most reliable genres of economic / financial journalism is the "Americans aren't saving enough for retirement" boilerplate piece. Nothing is easier to write. Cite the low rate of personal savings. Estimate what a person is likely to need to live in retirement for x years. Mention that relying on Social Security is really dicey to prepare people for the reality that it's disappearing in the next decade or two. Get a graphic of a piggy bank with a red arrow pointing down. Go to lunch.

The underlying fallacy of this argument is that there is something meaningful most Americans could be doing that they simply aren't prudent or smart enough to do, that the path to a financially secure retirement is there and most of us are just too dumb to tread it. Sure, anecdotal evidence is pretty easy to find; some people take on a lot of debt relative to their income and some people who could be financially secure spend frivolously on stupid things. Too often, though, those anecdotes become the argument, like during the housing crisis when lazy homeowners who just didn't feel like repaying their mortgages became the accepted explanation for a collapse designed and engineered by an unregulated industry allowed to let their wildest fantasies play out in reality.

Understanding why Americans save so little for retirement comes back, as so many things economic do, to stagnant wages. People who don't make much money are barely meeting expenses, especially in a system engineered to throw large financial obligations at them in random intervals (big medical bills, educational expenses, the car you have to own because public transit sucks, etc). The bigger problem, and one that not just the very poor experience, is that if you save 10 or 20 percent of your income and your income isn't very high, you rapidly realize how little that accomplishes. It is not hard to see why a lot of people conclude that the money is better spent now than saved in a financial system they do not understand (God only knows, the 90% of us who are financially unsophisticated think, what a 403b is going to be worth in 30 or 40 years) for a future that may never come.

If your annual income is under six figures and you're not getting some kind of generous retirement plan benefit from your employer – and the overwhelming majority of Americans fail to meet those conditions – there is an outstanding chance that whatever you manage to save isn't going to be "enough." You can save as diligently as you want and still retire poor. Ten percent of a shitty income is shit. Twenty percent of Not Much is Not Much.

Talk to people in the industry, or get a financial planner three beers in, and they will tell you that the problem with most Americans' retirement saving is that he or she simply doesn't make enough money. You can only cut back so many expenses. You can only scrimp so much. You can only tell people not to spend any money on anything ever so many times. Eventually the math wins and you must confront the reality that even if it's possible (and generally it isn't) for people to raise kids, pay for affordable housing, and meet other expenses on 90% of their after-tax income, saving that 10% doesn't really amount to shit in the long run. The only way to make that look like it will work is to work until age 75 or 80 (reducing the number of years one must live off savings in the model) or to assume some ridiculous, pie-sky rate of return that will never happen.

The definition of a system that does not work is one in which an individual can follow every one of the rules and still come out a loser. Save 10% annually of a median income in this country (about $43,000) for ten years and, congratulations, you have $43,000. Do it for your whole working life at that salary (which will never go up, because of course it won't) and you have maybe $150,000. How long is that going to last in your retirement given what things are likely to cost in 2045 or whenever.

Now consider that half the country earns less than that and do the math again. It just doesn't work. Rather than focusing on the handful of people who spend like idiots, let's talk about the reality that following every single rule of prudent retirement and financial planning is not going to allow most of us to retire until we're ready to drop. With the extinction of defined benefit retirement plans, our savings are tied to our earnings and our earnings aren't moving. It'll be an interesting time to be alive when everyone figures that out.