I read a letter in a Utah paper today in which the writer complains that she has gained nothing by being a conservative saver all her life. With taxes on interest earned and medical costs today, she says that she understands why people don’t save, even though we are told we need to all the time. She then makes the point that one medical problem, such a short-term disability, could wipe out all the savings that she has (for which she has forgone vacations, luxuries, etc.) while the non-saver would simply use medicaid for the same problem. It’s a good point, and a systemic fault with the U.S. system of taxation. The government provides disincentives for savings (taxing interest) and incentives for taking on debt (mortgage interest deduction) and then complains people don’t save? I’ve discussed this before here in the blog, but it’s an important distinction that I believe gets overlooked often.