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CU System
Americans report mixed progress on savings efforts
WASHINGTON (2/26/08)--About half of U.S. households report adequate progress in their savings attempts, says a study released Monday in conjunction with America Saves Week, an annual event to encourage saving. Roughly 53% of those surveyed save at least 5% of their income, while 57% of those not retired say they are saving enough for retirement with a "desirable standard of living," said the report. The national survey was commissioned by the American Savings Education Council (ASEC) and America Saves, a group of 80 organizations participating in America Saves Week, which is this week. Many credit unions and the Credit Union National Association are participating. Nearly three-fourths (73%) of consumers surveyed said they "spend less than their income and save the difference." Although 53% save at least 5% of their income, only 28% save at least 10%--the amount experts urge people to save. Seventy-one percent of respondents reported they have sufficient emergency savings to pay for unexpected expenses such as car repairs or a doctor's visit. Yet, 57% said they are saving enough for retirement with a desirable standard of living. One key reason for inadequate retirement savings: a failure or inability to "save for retirement at work through a 401(k) or other contributory plan." Only 55% of the non-retired respondents said they have such a plan. Self-reporting savings habits also help account for inadequate savings progress:
* 62% have a savings plan with specific goals; * 49% have a spending plan that allows them to save enough money to achieve the goals of their saving plan; * 42% save automatically through regular, preauthorized transfers from checking to saving or investments; and * 41% save a portion of tax refunds, gifts, bonuses or other financial windfalls.
Few reported serious debt problems: 21% said their consumer debt is growing or remains at the same level, and 76% will pay off all mortgage debt before retirement. The findings are sobering, given the tendency of people to report savings habits and progress as positively as possible. "Hard data about savings behavior suggest that responses to several questions were buoyed by the personal optimism of respondents," said Stephen Brobeck, executive director of Consumer Federation of America and a leader in America Saves. Income differences influence savings more strongly than other factors such as age, gender, ethnicity and education, said the report. A large majority of households with at least $75,000 (high-income group), about half of those with incomes between $35,000 and $75,000 (middle incomers); and a small minority of those with less than $35,000 (low-income group) were adequate savers. Other findings:
* 81% of the high-income group and 34% of the low-income group reported saving at least 5% of their income; * 90% of high-incomers and 48% of the low-incomers reported adequate emergency savings; * Among those not retired, 85% of high-incomers and 28% of low-incomers said they are saving adequately for retirement; * Among the non-retired population, 77% of the high-income group and 24% of the low-income group reported participating in a retirement plan at work; * 85% of the high-income group and 36% of the low-income group reported having a savings plan; and * 72% of the high-income group and 29% of the low-income group said they have a spending plan.
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