Only half of Americans have good savings habits and feel prepared for retirement, according to a new survey released today as part of America Saves Week.
The sixth annual survey, sponsored by the Consumer Federation of America, American Savings Education Council and the Employee Benefit Research Institute, found that 54 percent of the 1,000 adult respondents nationwide said they have a savings plan with specific goals.
Forty-three percent said they have a spending plan that allows them to save enough money to achieve the goals of their savings plan. Half of those who are not yet retired said they save for retirement at work through a 401(k) or other contributory plan.
Forty-one percent said that outside of work they save automatically through regular preauthorized transfers from checking to savings or investments and 49 percent know their net worth.
While nearly two-thirds of respondents, 65 percent, said they have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit, only 49 percent of those who are still working said they are saving enough for a retirement in which they will have a desirable standard of living.
“According to the EBRI Retirement Security Projection Model, more than half of Baby Boomer and Gen-Xers will be able to retire with enough money to cover the cost of basic retirement needs as well as uninsured health care costs, assuming they retire at age 65 and retain any net housing equity in retirement until other financial resources are depleted,” said Dallas Salisbury, chairman of ASEC and president and CEO of the Employee Benefit Research Institute. “But a significant number are simulated to be at risk of running short of money in retirement. They know they need to save more.”
The survey also revealed no improvement in the reported financial condition of families over the past year. From 2010 to 2012, there was a steady decline in key savings indicators. While there was no significant deterioration between February 2012 and February 2013 in these indicators, there was also no improvement – spending less than income and saving the difference (66 percent in 2012 and 65 percent in 2013), having sufficient emergency savings (66 percent and 65 percent), and among the non-retired, saving enough for retirement (51 percent and 49 percent).
“The recession still has not ended for millions of American families,” said Stephen Brobeck, executive director of the Consumer Federation of America and a founder of America Saves. “Many working families are still suffering from high unemployment rates, stagnant incomes, and a housing market that is just beginning to recover. The over one thousand organizations who have signed up to participate in America Saves Week recognize this and are helping individuals and families to save and improve their finances.”
The motto of America Saves Week is, “Set a goal; make a plan; save automatically.” On a teleconference about America Saves Week on Monday, organizers said that employers, government agencies, nonprofits, financial institutions and community organizations need to do more to educate consumers about the benefits of saving money. Low to moderate income families have the least amount in savings so more should be done to inform them of their options. The first step is to open a savings account, said Salisbury.
There are many planning tools available on the America Saves Week website.