WASHINGTON–Fewer than two-fifths (38%) of American households report good or excellent progress in meeting their savings needs, with over one-quarter (27%) indicating no progress at all, according to the tenth annual America Saves Week survey, which is being released in conjunction with the annual America and Military Saves Weeks.
The survey of 1,007 adult Americans taken from Jan. 26-29 shows that over the past decade perceived savings outcomes worsened, before improving
“The Great Recession and recovery from this debacle help explain these trends,” noted Stephen Brobeck, CFA executive director and a founder of America Saves, in a statement. “During the decade, employment, incomes, stock prices, and home values declined then rose, first depressing personal saving and then allowing it to grow,” he added.
Surprisingly, the organization noted that during the past decade saving habits eroded, as the table below indicates.
“Those who know their net worth are more likely, than those who do not, to allocate their income to saving rather than spending,” the organization said. “Research has shown that those with a saving plan save far more than those who do not. The only effective way for most Americans to save is automatically at or outside work.”
“The erosion of saving habits during the economic recovery was unexpected,” noted Brobeck. “I suspect that low savings yields and less promotion of saving by many banks and credit unions had something to do with this, as did the preoccupation of some households with obtaining relief from crushing debt burdens.”
Few Lower Income Americans Report Good Progress in Meeting Savings Needs
Whether Americans report making progress in meeting their savings needs is strongly associated with household income, according to America Saves. Nearly two-thirds (66%) of those with incomes $100,000 and over report good or excellent savings progress, with only 7% indicating no progress. In contrast, only 14% of those with incomes below $25,000 report good or excellent savings progress, and 58% said they are making no progress at all.
These numbers are consistent with the percentages of the two income groups who said they were saving at least 5% of their incomes – 77% of the upper income group but only 24% of the lower income group. Only 7% of the upper income group, but 53% of the lower income group, said they were saving nothing at all.
“While it is difficult for many lower-income families to build savings, most have the ability to save funds that will help meet emergencies in the near future and supplement Social Security payments in retirement,” said Brobeck. “The most effective way to do this is through automatic deposits from paychecks and/or checking accounts into regular and retirement savings accounts.”