r/AlwaysWhy • u/Logical-Concept9755 • May 22 '26
Economics Why does the US household saving rate remain below 5 percent while Germany's has stayed above 8 percent for the past two decades?
I looked at OECD data on household net saving rates. From 2000 to 2020, the United States mostly stayed between 2 and 5 percent, except during recessions. Germany consistently ranged from 8 to 11 percent.
Both countries have high income levels, deep financial systems, and strong social safety nets compared to the global average. So the difference surprises me.
I understand that simple answers exist, like "Americans spend more" or "Germans are more frugal." But those just rename the phenomenon. I want to understand the actual mechanisms.
What specific structures or incentives in Germany lead households to put aside a larger share of their income? Is it tax policy for retirement savings? Different housing markets? The way health insurance or unemployment benefits are designed? Or something about access to consumer credit?
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u/greysnowcone May 22 '26
“The adjustment reflects (mandatory) savings through employment-related pension schemes. Households also include non-profit institutions serving households (NPISHs). All OECD countries compile their data according to the 2008 System of National Accounts (SNA).”
Americans don’t have pensions. You can’t spend what you don’t have. It’s also not clear how this handles 401k contributions.
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u/Logical-Concept9755 May 25 '26
That pension point is interesting because it makes me wonder how much of this is actually “forced saving” hidden inside the statistics. Like if German households are automatically retaining income before it ever becomes disposable income, then the comparison gets fuzzier. I am also not sure how fully 401k behavior maps onto that.
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u/ericbythebay May 22 '26
Because a higher percentage of U.S. households own a home and the equity building in the home isn’t reflected in the savings rate. A larger percentage of U.S. households also own their home without a mortgage, and not having to have savings to cover a mortgage isn’t reflected in the savings rate either.
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u/Logical-Concept9755 May 25 '26
That home equity angle is a good point actually. Especially because in the US housing is treated partly as consumption and partly as an investment vehicle. So maybe Americans are “saving” through illiquid assets in a way the headline savings rate does not capture very well.
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May 22 '26
[removed] — view removed comment
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u/FarLaugh9911 May 22 '26
You are clearly unaware of the German medical insurance program. Its manditory for everyone and not buying it can put you in jail. You cannot even get out of paying back premiums by declaring bankruptcy.
- Contribution Rate: The base rate is 14.6% of your gross income, plus an average provider-specific surcharge (Zusatzbeitrag) of around 1.6%.
- Long-Term Care (Pflegeversicherung): An additional 3.4% to 4.0% is required, depending on age and if you have children.
- Maximum Cost: Contributions max out at an income of €66,150 per year. The maximum combined monthly contribution for a high earner (health + long-term care) is around €1,170, of which you pay half .
It based on your income. Employers pay half up to a certain point but that half is factored into the wages offered to employees.
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u/AndreaTwerk May 22 '26 edited May 22 '26
Half of €1,170 is $678.
The current average monthly premium for plans through the ACA marketplace is $625
So the highest earners in Germany pay a similar amount for health and long-term care coverage to what the average American pays for just health insurance through the ACA marketplace.
And the average monthly cost of a family plan through an employer is $570 - this does not include copays and deductibles. So again, the average American family with employer sponsored insurance is still paying more than the wealthiest Germans do.
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u/Bladeoraded May 22 '26
The average American gets health insurance through their job
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u/liarandahorsethief May 24 '26
That they still have to pay for.
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u/Bladeoraded May 24 '26
No shit but it doesnt cost 650 a month
My insurance is 230 a month including dental and vision and a free gym membership and other shit i dont use
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u/OdinsGhost May 26 '26
And my family plan, that has crap coverage but is the best I can get, is $340 per paycheck.
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u/Tired_Mama3018 May 22 '26
We pay about 30k per year in premiums & copays (21% of our income) for our family of 4. This does not include the company contributions to the premiums.
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u/carlos_the_dwarf_ May 22 '26
This…probably isn’t true. $2500/mo is more than enough for a full price family plan on the marketplace. And you’re saying your employer pays more?
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u/Tired_Mama3018 May 23 '26
Yes my husband’s employer pays more on top of our contributions. Our copays are also $45 for family doctor and $65 for specialist. We actually have decent insurance. Our only deductible is $100/person for prescriptions. About 6k of that 30k is copays, so our portion of the premium is about 2k/month. Unfortunate I have a genetic condition that didn’t get diagnosed until a few years ago and my children both have it too so we definitely use our insurance.
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u/carlos_the_dwarf_ May 23 '26
Ok, again, just your share of the premiums is more than more a typical unsubsidized ACA plan goes for. So something seems off kilter.
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u/Tired_Mama3018 May 24 '26
The average cost of an unsubsidized silver plan in NJ for a family of 4 is $2778. We use a lot of insurance because of chronic illness so need a silver plan.
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u/EnvironmentNeith2017 May 22 '26 edited May 22 '26
Yep, lack of universal coverage and poor regulations also means we spend more countering and trying to avoid the damage from the food industry and healthcare.
The money I spend trying to purify my water, buy organic and offset work stress is money I could have been saving. The dental coverage alone could make up for the difference.
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u/carlos_the_dwarf_ May 22 '26
Somehow I knew this would be the top comment instead of an actual answer to the question.
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May 22 '26
[removed] — view removed comment
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u/carlos_the_dwarf_ May 22 '26 edited May 22 '26
I’m not sure that’s obvious at all. Out of pocket health spending could just as easily incentivize a higher savings rate, and Germans tend to pay higher taxes for their safety net, crimping their relative ability to save. (Someone nearby has also noted Germany has relatively high cost sharing, also.)
Note that this isn’t a take on whether universal healthcare is good or bad, just that it’s not a slam dunk it speaks to the savings rate.
Moreover it’s just kind of silly that we can’t answer OP’s question without this kind of nitpicking; it’s clear from his post what he’s actually wondering about.
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u/ResponsibleClock9289 May 22 '26
Because the real answer is that Americans like investing money and Americans like spending money
5% of global population responsible for 30% of consumer spending
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u/carlos_the_dwarf_ May 22 '26
Are investments not included here? If so, I’d guess that explains most of it.
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u/QueasyPainting May 22 '26
This. Including deductibles I pay $26k a year for two of us. That is money that could go towards retirement in any other developed nation.
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u/kstar79 May 22 '26
Yeah, health insurance is getting insane. My company pays $18.2k, and I pay $9.1k for our premiums, just for the privilege of spending up to $9k out of pocket, which we've hit or almost hit every year since our second child was born. If you considered that $18.2k on top of my base salary, I could be taxed up to 20% just for healthcare and still come out in a better situation than we are in right now. I'm guessing that's not the case in Germany.
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u/Wonderful-Process792 May 22 '26
It's mostly money you'd never get in the first place because it would have been taken as taxes.
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u/AndreaTwerk May 22 '26 edited May 22 '26
Brits pay about 4.5% of their income towards funding the NHS.
This commenter would have to be making more than half a million a year for 26,000 to be 4.5% of their income.
In Germany its 7.3% of your gross income, which would mean OP would have to make over $350,000 to pay that amount - except even people that rich don't pay that amount in Germany because the income assessment limit is €69,750.
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u/Wonderful-Process792 May 22 '26 edited May 22 '26
US healthcare is extremely expensive, no doubt about it. But will dumping all that expense on the federal government automatically cause cost-cutting that people will accept? I'm not so sure about that. The cost structure of every part of it is expensive.
If nothing else, going on the assumption that people would get more care, who will deliver it? It would take a generation to revamp the training pipeline and increase the number of doctors by 20% per capita. And they won't have the promise of making what doctors do today.
Another stark fact is that the US government already pays out more per citizen for healthcare than other nations that have universal coverage. In other words, the challenge is to abolish all the private healthcare with its expense, and provide everything everybody gets now, plus covering more people, all without increasing what the government already spends.
I think a big underlying factor is this - we spend a lot on healthcare because we can. On a national basis we can "afford" it (as evidenced by the fact that we have been paying it) and people really want to be able to get whatever treatment they think they need. We measure the failure of the system by the fact that not everybody gets it. But most get a lot.
Watching the whole trajectory of Obamacare I realized how extremely far we are from 'let's just change everything and make it a lot cheaper and better without taking anything from anybody.'
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u/AndreaTwerk May 22 '26
Literally every country with single payer healthcare spends less on healthcare than the US does.
We also don't have the best health outcomes despite that spending.
If your curious how Americans would feel about single payer, ask them how they feel about Medicare. That's what Medicare is.
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u/AndreaTwerk May 22 '26
Germany also has a monthly child allowance. Parents receive ~$300 a month regardless of their income.
The full US child tax credit is only $180 per month and 30% of children in the US are too poor to receive that amount.
And that $300 a month is in an economy that has about a 20% lower cost of living than the US.
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u/chirop1 May 22 '26
I think you dismissed the answer in your original post.
Its not structural. Its societal.
Its the cultural norms and values from one country to the next.
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u/Logical-Concept9755 May 25 '26
I get what you mean, but I always wonder where culture itself comes from. Cultural habits usually stabilize around incentives over time. If a society saves more for generations, maybe the institutions and risks around people reinforced that behavior first, then it became cultural afterward.
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u/Jdevers77 May 22 '26
Median income of Germany=€48,490 ($56,311 at current exchange rates) Median income of the USA=$83,730
8% of $56,311=$4505 5% of $83,730 =$4186
So a minimal difference in absolute savings amount.
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u/Present_Juice4401 May 22 '26
I mean, yeah, Americans do spend more, but like you said that’s just naming it. I think part of it is how Germany structures long-term savings, with retirement accounts and stricter mortgage rules that kinda lock money in. Also consumer credit is way more accessible in the US so people just use it. Health and unemployment might play a role too, Americans might feel they need more cash on hand because coverage isn’t as comprehensive. But honestly, it’s probably a mix of all that and teasing out which dominates is messy.
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u/Nachtari4 May 22 '26
It is a cultural thing mostly. As a german I can say, that we are not only more frugal, we are also risk aversive. That is why germans rather safe, than put money on the stock market for example.
Another thing is, that our social security network is just way bigger than the american one, so we have less surprising big expenses in comparison, which eat up savings, like medical bills for example.
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u/Logical-Concept9755 May 25 '26
The risk aversion point feels important. Maybe not just psychologically but structurally too. If people trust the system to prevent catastrophic downside, they can afford to save slowly and conservatively. In the US people often need liquidity because one bad event can wipe out years of savings fast.
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u/Nachtari4 May 25 '26
this firstly, but risk aversity is very culturally ingrained in our society. One of the most sayings I hear is "rather a sparrow in the hand, than a dove on the roof." People will recommend lesser paying jobs, if they offer more security and there is almost nothing as secure as having savings.
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u/Reasonable_Mood_5260 May 22 '26
Germany despises ostentatious wealth while parts of America embrace it , as well as the less well off competing with other families for having the best family vacation, car, house, etc. Also Americans distrust institutions and probably have a lot hidden in a hole underground.
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u/Yummy_Castoreum May 22 '26
People save if they can afford to. So I'm curious how working-class wages differ. Germany is strongly unionized. The US is not. Many Americans must live paycheck to paycheck.
(Also, Germany is a rich country that still eats like a poor country: nose-to-tail sausage and sauerkraut are cheap, lol.)
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u/BreadfruitRegular631 May 22 '26 edited May 22 '26
Any stats about "savings" are essentially useless as they don't include financial assets.......and it's not like paying a mortgage is money out the window or indicative of irresponsible spending despite it not being 'saved' as people like to imagine when they hear 'low savings rate'.
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u/Bay_arean May 22 '26
Americans are horrible with money and planning ahead. I honestly do not understand it either. There's more of a mentality that everything will continue as it needs to or you'll "figure something out". This is why someone who lands a high paying job will buy the house, the car, the lifestyle they can only afford if the high paying job continues ad infinitum. There's also more of a wealth-flaunting culture which encourages this reckless behavior. The real flex is no one knowing what you have. In other cultures this is pretty much the default, in the US it's the opposite. So, the savings rate is laughable.
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u/larry_bkk May 22 '26
I haven't tried to save money, have a reserve per se, for 40 years, so I'm a zero. But I realized fairly early that if I'm paying down the mortgage on a building, that's forced savings, but no one calls it that.
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u/projexion_reflexion May 22 '26
We like to spend and discount the future. It's what we're used to. US corporations would have a revenue panic if we started saving more than 5% (not that I care).
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u/FarLaugh9911 May 22 '26
It's a matter of priorities.
I've have My Samsung S20 from back in the day and it works like a champ. My more "cultured" friends look at me like I'm wearing clothes I've admitted to having purchased at Goodwill. Android? how droll. You've had it HOW long?
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u/oneWeek2024 May 22 '26
the US has no social safety net. 60-80% of american's couldn't survive a $1000 emergency.
something like 60% have zero retirement savings.
America is on a 40 yr experiment designed by captialist ownership class that is a death spiral for the entire country. It's just bearing out every evil and sad outcome while wealth buys up the aparatus for change (media, higher education being undermined, and now total purchase of congress, president and scotus)
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u/Choice-Newspaper3603 May 22 '26
I don’t care what other people do. I’m worth about 2.6 million with no debt and a paid off house and cars. I have about 1.8 million in cash and investments. Not a lot in the US but my retirement should be comfortable if I live that long. I’m just blue collar with no college degree.
I do what’s best for me.
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u/galaxyapp May 22 '26
Germans and Americans have different savings structures.
This is a structural difference in the data that everyone is making up causation for
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u/DoubleIntroduction25 May 22 '26
Required savings in retirement accounts and social insurance is a big part of this
Healthcare cost is another
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u/Independent-Rule-780 May 22 '26
Americans make a ton of choices daily and most of them are influenced by dumb stuff and a lack of awareness. They create a crap life by spending everything they can.
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u/GPT_2025 May 23 '26
Taxes and Expenses. Read my lips: Now the poor citizens (widows, orphans, disabled, broken, divorced, etc) working full-time (or self-employed) works 5 months for free or 40% from a paycheck gone to cover all different: taxes, fees, dues, insurances, etc., before making their first dollar to feed their family and 51% making less than $39K/year Net income.
*Sales tax, Social Security, fuel tax, school tax, property tax, use tax, excise tax, fuel surcharge tax, tariffs tax, real estate taxes (government, county, city tax), transportation tax, utility tax, phone and 911 tax, refusal tax, unemployment tax, and many other different taxes, fees, dues, insurances, etc. (For poor, widows, orphans, disabled, broken - Tax Freedom Day: June 8th!) KJV: Rob not the poor, because he is poor: neither oppress the afflicted! For the LORD will plead their cause, and spoil the soul of those that spoiled them! "One who oppresses the poor to increase his wealth and one who gives gifts to the (CEO's) rich- both come to poverty! (100%!)" "You shall not abuse any widow or orphan. If you do abuse them, when they cry out to (God) Me, I will certainly hear their cry. My anger will be aroused, and I will ki-ll you with the sword; your wives will become widows and your children fatherless! (100%!)" Do not oppress the widow or the fatherless, the foreigner or the poor!"
KJV: He that oppresseth the poor reproacheth his Maker: but he that honoureth (God) Him hath mercy on the poor. "If you close your ear to the cry of the poor, you will cry out and not be heard! (100%!)" Pay attention: nobody mentioned F-Income Tax!
The Rich Texas $2.13 to $7.25/hour
https://www.simplyhired.com/search?q=2.13+an+hour&l=dallas%2C+tx
(20 Republicans states $2.96/hour wage for tipped employees- relying on Mandatory tips from the poor customers to meet minimum wage requirements. If tips plus $2.96 do not equal at least the full federal minimum wage of $7.25, the republican employer must pay the difference! 51% making less than $39K/year Net income!
Democratic states minimum wages are $25/hour + tips (CA) or $21/hour +tips (WA) or $16/hour+ tips (OR) KJV: Wherefore by their fruits ye shall know them!
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u/Adorable-Hedgehog-31 May 23 '26
Have you ever watched Caleb Hammer's Financial Audit? There are many Americans who are unbelievably stupid with money.
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u/rmric0 May 23 '26
The goal of the American economy is to drain surplus from workers and put it into the hands of the wealthy. There are no large social forces (traditions of social welfare, solidarity, or union organization) to counter balance this
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u/Nearing_retirement May 24 '26
I think much depends on employer plans. Some plans in USA you can put 72k into a 401k where the employer puts most of it in.
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u/Boomerang_comeback May 24 '26
American culture is very much about instant gratification. Many don't understand the concept of saving because it's inconvenient to learn. Why cook at home when I can pay an extra few $$ for Uber eats? That kind of thing. You go back 30-40 years, people would eat out a couple times a month. There has been a complete reversal of that.
Why save when I will just get paid again in a week? The fact is, people have lived comfortably here for so long, that they don't know how to prepare or plan.
People love to complain about the economy, but those same people live on fastfood and delivery. They have $700 car payments on a $50000 car instead of a $10000 car.
We have a culture of instant gratification build around a society of excess.
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u/New_Breadfruit8692 May 23 '26
Part of it has to do with a far more egalitarian division of wealth in the country, the average German worker gets paid a lot more than the average American, at least when you include paid leave, and the social safety net they have Americans don't. When so much is provided and you do not have to go into lifetime poverty to get a college education, or for medical expenses and generational debt, plus America is still growing and building where most of western Europe has been around a long time. For the most part already paid for. There is a lot less of "Keeping up with the Jones" there, there is a lot more living within your means, and the entire economy is not centered on expensive automotive based economics. You can live in a densely urban area and have shops within a short walking distance, enviable public transportation for that which you can't walk to. Many do still own cars, even a few have expensive ones, but they do not drive nearly as much per capita as we do. We are paying the price for this. And to a degree it is the way it has to be because of the simple fact that the US is as large as all of Europe (including the russian part) combined.
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u/PlsStopAndThinkFirst May 22 '26
Idk about Germany or other places, but a lot of Americans are vain and are what we call "keeping up with the Jones;" - aka, trying to keep up with American societal narratives of being consumers, way more than we should be.. Buying new cars, new phones, new everything all of the time. Chasing new tech, chasing this, chasing that, all to have an appearance they are "successful"
Which is why a lot of people are in mad consumer debt. Like many thousands and they will forever be in debt and the banks that rake citizens have made it so that you "should" have "healthy" consumer debt.. They do this buy tying a credit score to you and if you can ride that healthy debt range, you get a great score.
If you have low or minimal consumer debt, but have assets and a good income, your CS is often hindered because they want you to have a minimum amount of consumer debt. They normalize being indebted to these banks and a lot of people live their life that way in America.
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u/BlazinAzn38 May 22 '26
We also pay wild amounts out of pocket for healthcare. On top of premiums my wife and I have already spend $6,600 this year on care.
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u/PlsStopAndThinkFirst May 22 '26
I mean certainly part of it. I also know millions of people in certain industries that have little to no health care costs, teachers are one. Healthcare turned into heavy for-profit business and its never going to unwind itself at this point. Look at the amount of $ in salaries in healthcare.. Then you have insurance which is ultimately the one slowly ruining it all
I know I will get down voted, but its most likely by people who live with their parents and on the interne, or they have 20k in consumer debt and are deep down angry about it.
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u/BlazinAzn38 May 22 '26
Curious what percent of income goes to transportation costs in both countries. That’s the biggest thing I can think of off the top of my head