A few months ago, government number crunchers created a rash of hand wringing with the announcement that for the first time since the Depression, the savings rate of individual Americans turned negative.

That is to say, by one widely followed measure, people in this country are, in the aggregate, not only neglecting their piggy banks, they are spending more than they are taking in.

The country's savings rate has been low and declining for a number of years, and many economists and policymakers have viewed the trend with alarm.

Some of this alarm, of course, is merely opportunism by interest groups looking for an excuse to push a particular financial product or public policy, but there is genuine reason for concern.

On a large-scale level, economists worry that the nation lacks adequate capital to finance its own growth and must increasingly rely on investment from foreigners. At the Main Street level, there is concern that the 76 million Americans born between 1946 and 1964--the baby-boom generation--may not be saving enough to maintain their standard of living in retirement.

Though macroeconomic investment issues are important in the long run, retirement saving is of more immediate concern to American families. If a demographic cohort the size of the baby boom arrives at old age without adequate personal resources, not only will the boomers themselves suffer, but they also will make wrenching demands on the rest of the population via their political clout.

Thus, if Americans are saving little or nothing (or even less than nothing), how worried should we be?

Based on studies and opinions presented last week at a conference on the subject sponsored by the American Association of Retired Persons (AARP), it appears that the picture isn't as bad as the recent savings figures make it seem, but it's bad enough.

First, at the personal level, the savings rate is not really the issue. Instead it's wealth accumulation.

Americans will be retiring on their assets, whether acquired through saving or some other way, so what we want to ask is whether those assets will be sufficient to maintain us to the end of our lives.

Saving, of course, plays a key role in wealth accumulation for most families, but other factors, such as investment returns, are just as important. The stock market's current boom has made it possible for some people who have been saving to stop, and still see their wealth increase.

The saving data collected by the government are really meant to answer other questions, and the most widely used savings measures do not include capital gains. Without capital gains, notes Brookings Institution economist William G. Gale, savings rates are at the lowest since the Depression; if capital gains are included, wealth accumulation is at its highest level in 50 years.

So unless the stock market collapses, everything is okay, right?

Well, not quite.

Wealth in the United States is not distributed very evenly. The very rich have a lot more than the rest of us, so the aggregate figures mask the reality that many families have little or nothing in the way of accumulated assets. There is also a sharp difference in the prospects of those who will have a pension and those who will not.

A recently completed study sponsored by the AARP found that older baby boomers are doing better than younger ones. In part this is because older boomers are now in their peak earning years, but the survey also found that older boomers had more when they were younger than younger boomers have at a comparable age. This suggests that older boomers either saved more sooner or got better returns on the money they did put aside.

It may also reflect the impact of the inflationary surge of the 1970s on people of different ages. The oldest boomers would have finished college in the late 1960s or early '70s, before the big run-up in college costs. They would thus have emerged with less debt than younger graduates, would more easily have bought a house, and, having done so, could have ridden the real estate inflation wave of the '70s and early '80s.

Not only would this have given them a very large asset very cheaply, but inflation would have shriveled their mortgage payment relative to their income, freeing money to invest as the stock market took off.

Not everyone did this, of course, but it is easy to find families around Washington who have quietly prospered on just this scenario.

The best news for the younger boomers is that they have more time. Time, as we all know, coupled with saving and decent investment returns, makes up for a lot.

Thus, the AARP study found, the average older boomer couple with a pension would need to save 3 percent of income annually to retire with 80 percent of pre-retirement income, assuming they live to normal life expectancy. A couple without a pension would need to save 8.3 percent of income to achieve the same goal.

A younger boomer couple, whose current assets total only about 40 percent of the older couple's, could still retire with 80 percent of pre-retirement income by saving 2.6 percent if they have a pension, or 5.8 percent if they lack a pension, the study found.

But the study also found a wide range of savings rates needed for different types of households, and if assumptions about life span, investment returns and other factors are changed. For example, a single older boomer without a pension would need to save 14.4 percent of income to reach the target.

If this same older single boomer were to live to age 90 and achieve an investment return of 2 percent (instead of the 3.9 percent, net of administrative fees and inflation, assumed in the earlier examples), he or she would need to save a staggering 28.8 percent of income to retire and have 80 percent of pre-retirement income.

In general, the study found, couples have an easier time than singles, largely because Social Security benefits for couples are higher.

On the other hand, if 70 percent of pre-retirement income is acceptable, savings needs ease considerably. A younger couple with a pension would need to save only 0.3 percent of income to reach that target, the study found.

Gale, who has studied baby boomers' saving extensively, figures that if 60 percent to 80 percent of pre-retirement income is adequate, roughly a third of the boomers are doing very well, a third are doing very poorly and a third are in between--meaning that their savings, including their home equity, are barely adequate. They will be all right if everything goes their way, but if it doesn't, their living standard will likely fall.

"You can say the glass is two-thirds full, or you can say the glass is two-thirds empty," Gale said, meaning that savings of the top two-thirds of the boomers appear adequate but living standards are at risk for the bottom two-thirds.

The clear lesson for this middle group is that it is crucial to start a savings/investment program as soon as possible. (The top group presumably is already doing so, and the poor have more immediate concerns.) Time, regular contributions and fairly modest investment returns--AARP assumed 4.9 percent gross, or 3.9 after inflation and administrative expenses--can achieve impressive results.

Boomers' Retirement

Older baby boomers have on average accumulated more assets than younger ones, but younger ones have more time before retirement. Here is the percentage of annual income that older and younger boomers need to save to retire with 80 percent of their pre-retirement income.

Older single

Pension

9.1%

No pension

14.4%

Older couple

Pension

3.0%

No pension

8.3%

Younger single

Pension

5.7%

No pension

8.9%

Younger couple

Pension

2.6%

No pension

5.8%

NOTE: Older boomer is born in 1950, younger in 1960; both start work at 22 and retire at age of eligibility for full benefits. Pension benefits are assumed to be 1.5 percent of the highest five years of salary times years of service. Investment return is assumed to be 3.9 percent after 1 percent administrative expenses and inflation.

SOURCE: American Association of Retired Persons