So, why don’t Americans save money? A complete answer should take into consideration three things:

(1) Since the phenomenon is new, its cause must be new.

(2) Since the decline in savings among rich countries is global, its cause must be global.

(3) Since America’s poor and middle class are so especially ill-prepared for retirement, there must be something “special" about America.

Theory 1: Americans stopped saving when their incomes stopped growing.

The heyday of American saving was also a heyday of American income growth. This makes a lot of sense: It’s easier to save money when there’s more money to save.

Between 1960 and 1973, income per capita grew at an annual rate of 3.2 percent. But in the following two decades, its growth rate fell by half to just 1.5 percent annually. Several other countries saw similar slowdowns by the late 1980s, as well. Among almost all major industrial countries, “rates of both saving and income growth have been simultaneously declining,” the economists Barry Bosworth, Gary Burtless, and John Sabelhaus wrote in a 1991 Brookings paper. Middle-class saving fell as households spent more of their income to keep up with rising expenses, like housing and health care, and with their own expectations that earnings would eventually start growing.

But this theory isn’t complete. Real income did start growing in the U.S. in the 1990s. So, why did savings continue to plummet after that?

Theory 2: The poor and middle class went into debt to buy houses.

The 1990s turned out to be a great decade in the U.S. for income growth. But the personal saving rate fell by more than five percentage points, the most of any decade in the last half century.

What happened in the 1990s? Mortgage debt happened.

Total Mortgage Debt in the U.S., 1970-2010

FRED

The U.S. homeownership rate, which barely budged between 1985 and 1995, suddenly took off in the 1990s, peaking at an all-time high in the mid-2000s.

One plausible story is that many Americans gave up their saving habits in the stagflation ‘70s, and by the time real income growth took off in the 1990s, many of them used the credit boom to buy suburban houses, cars, and furniture. The saving rate of the bottom 90 turned negative in 1998, partly thanks to this huge rise in mortgage debt. The housing bust was painful for millions of people hit with foreclosures after the crash, and it was particularly painful for those who put most of their savings into buying houses.

Theory 3: U.S. policies make it easy to not save money.

In the last few decades, the U.S. private sector has moved from “defined benefit” retirement plans, where workers have a clear sense of how much money they'll get when they retire, to “defined contribution” plans, where workers only know how much money they're putting away each year. The 401(k) is an example of the latter.