Economy's Up, But Progress on Savings Is Down
A new survey also finds striking differences between the genders
You might think that the improving economy would make Americans feel more flush and lead them to save more than in recent years. You’d be wrong.
A survey released today for the 10 annual America Saves Week found a sizable drop in the percentage of people saying they were “saving enough for a retirement in which you will have a desirable standard of living.”
This year, only 52 percent said they were doing that, down from 55 percent last year and a full six percentage points below 2008’s 58 percent. And only 40 percent of U.S. households surveyed this year reported “good” or “excellent” progress in meeting their savings needs.
The survey of 1,004 adult Americans is part of the America Saves campaign managed by the nonprofit Consumer Federation of America (CFA) and the American Savings Education Council (ASEC), a program of the Employee Benefit Research Institute Education and Research Fund.
One positive finding from the survey: 63 percent said they have “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit." This seems to contradict other, more pessimistic, recent studies of Americans' ability to manage financial emergencies, though I'd like to believe it's true.
Men, the America Saves survey also said, are making more progress as savers than women — or at least they said they are.
Men’s responses were “more positive” than women’s in 12 survey questions about financial well-being. For instance, 74 percent of men said they were making saving progress, but only 67 percent of women said they were. Similarly, 72 percent of men said they’re spending less than their income and saving the difference, but just 60 percent of women were doing this.
Stephen Brobeck, executive director of CFA and a founder of America Saves, chalks up the gender gap to differences in income and wealth between men and women. “The fact that men have larger incomes and financial assets than women makes it easier for them to save,” he said.
That’s part of the explanation. But I’m not sure it accounts for this survey finding: 54 percent of men said they know their net worth but only 41 percent of women did. To me, this suggests that women need to learn more about their finances, as a whole.
I’m slightly skeptical, though, about what the survey respondents said they would do as savers.
A striking 40 percent said they would contribute 10 percent or more to an employer-sponsored retirement program with auto-escalation — one that automatically increases annually the amount employees put in. In reality, among plans that offer auto-escalation, only a third contribute more than 10 percent.
More importantly, most employees don’t have the ability to save this way.
Just 48 percent of employers with large retirement plans offer an auto-escalation feature, according to the Defined Contribution Institutional Investment Association, and that percentage has plateaued since 2012. Worse, only 24 percent of the smallest plans have auto-escalation.
To encourage the public to save more, America Saves is running a contest. Submit a photo of yourself and your savings goal on the social media platform of your choice using the hashtag #imsavingfor and you might be the one person in America to win $500.
Good luck with that. But just in case you don't collect the $500 prize, use America Saves Week as the impetus to get you to salt away more money for your retirement.
