Only two-fifths of U.S. households report good or excellent progress in “meeting their savings needs.”
Other findings from the ninth annual America Saves survey are:
- Saving at least 5 percent of one’s income – 49 percent.
- Saving enough for retirement with a “desirable standard of living” – 52 percent.
- Automatic saving outside of work – 43 percent.
- No consumer debt – 38 percent.
Responses to other questions, however, show that about two-thirds of Americans are making modest savings progress: 70 percent reported at least some progress in meeting savings needs. Sixty-six percent reported saving some of their income. And 63 percent report “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.”
America Saves is managed by the Consumer Federation of America and the American Savings Education Council and includes the savings survey.
More men than women report saving progress
On 12 questions on financial well-being indicators, men’s responses were more positive than women’s, with differences ranging from 5 to 13 percent. For example, 74 percent of men, but only 67 percent of women, report that they’re making saving progress, and 44 percent of men, but only 36 percent of women, report good or excellent saving progress.
In addition, 72 percent of men, but only 60 percent of women, report that they’re spending less than income and saving the difference. This gender gap is also seen for those saving at least 5 percent of income – 54 percent of men compared to 45 percent of women.
“The most important reason for the gender gap in savings is differences in income and wealth,” said Stephen Brobeck, executive director of the federation and a founder of America Saves. “The fact that men have larger incomes and financial assets than women makes it easier for them to save.”
Many Americans acknowledge retirement savings shortfall
When the survey asked whether respondents were “saving enough for a retirement in which you will have a desirable standard of living,” only about half of non-retired persons, 52 percent, said “yes.” That figure is down 3 percent from last year, 55 percent, and down 6 percent from 2008, 58 percent. In addition, as for the other saver characteristics, there was a significant gender gap – 57 percent for non-retired men and 47 percent for non-retired women.
For those non-retired persons who said they aren’t saving enough for retirement, about one-quarter said the main reason is high day-to-day expenses, and another quarter said the main reason is debt and related expenses, with about half this group citing education expenses and debt.
However, for those under 45 years of age who are employed, 22 percent said education expenses and debt. For those over 45 years of age who are employed, the most cited expense, 16 percent, after day-to-day expenses is mortgage or housing expenses.
For the first time, the annual America Saves survey asked for respondents’ views about taking in retirement programs.
When asked the highest percentage of their salary that they’d contribute to a plan offered by their employers with automatic escalation, more than four-fifths indicated that they’d contribute more than 3 percent, with 40 percent indicating 10 percent or higher. And when asked what they’d do if their employer didn’t offer a retirement plan and they were automatically enrolled in an IRA administered by their state government with a default annual contribution of 3 percent, roughly equal percentages said they’d contribute less than 3 percent, 32 percent; 3 percent, 31 percent; and more than 3 percent, 28 percent.
Those with a plan save more successfully
Those with a “savings plan with specific goals” save more successfully than those without a plan. They spend less than their income and are saving the difference: 84 percent with a plan compared to 46 percent with no plan. In addition, those with a plan have sufficient emergency savings, 79 percent compared to those with no plan, 46 percent.
“The research clearly demonstrates that those with a plan are nearly two times as likely to spend less than they earn and save the difference,” said Nancy Register, director of America Saves.
“It’s a common theme to see expenses and debt get in the way of retirement savings,” said Kathy Stokes, director of the American Savings Education Council. “But even saving just a small amount can add up over time.”
