Dallas Salisbury, President and CEO of EBRI, says most people could afford to save more money but don’t. (WashingtonPostLive Production/Washington Post Live)

This is part of the Post Live panel discussion ‘Kitchen Table Economics,’ held April 16 at The Washington Post. View other videos from the discussion here.

Dallas Salisbury

President and chief executive,

Employee Benefit Research Institute

If you look at this in the retirement area, one of the issues of controversy at the moment is the percentage of people who borrow money through loans from 401(k) and other defined-contribution plans and provisions on hardship withdrawals. And there’s actually a movement that has been getting congressional focus that says, well, that so-called leakage is a terrible thing.

You need to start [saving] early, you need to start with as small an amount as you can.

And it’s the greatest power of the work programs that people have: the ability, whether it’s into a 401(k) or other type of defined-contribution plans, to automatically save, to pay yourself first, to take advantage of the employer taking it straight out of your paycheck, which regrettably in many smaller firms, less than 40 percent of the employees choose that pay yourself first.

We frequently ask people year after year, could you afford to save another $20 a month. And over three-quarters of the people say absolutely, yes, I could. And then you said, why not, and they say, well, I just don’t get around to it.

About 45 percent of people now enter retirement still having household mortgage debt. And 25 years ago, that was less than 10 percent of people. For the older individual, the principal debt load that they move into retirement with is housing debt.

Individuals are hitting retirement with more savings than they used to have, but the other side of that is they’re hitting retirement with more debt than they used to have.

It is so easy for people to use that credit card. It’s so easy to overspend. It’s so easy to buy that latte.

There’s no longer as much over-optimism about the rate of return you can get in the future. So it’s, gee, I actually need to save more money rather than counting on the markets to do it all for me, which was happening. Individuals were far too overconfident about, oh, I definitely am saving enough, I will have enough for retirement.

So realism is a good thing. It’s causing people to focus on their debt. It’s causing them to be more aggressive about saving.

Surveys indicate that the consumer has begun to think of the house once again as a place to live, not as their biggest investment. And with that, it comes to decisions like, well then, it might make sense to have a 15-year mortgage. It might make sense to stay in an apartment and buy a small apartment versus buying a big home. It’s leading in the data to people buying smaller homes than they were buying in the precollapse environment.

Choosing to save is the first thing people should do. They should do it often.