Most in US Have No Savings to Speak Of, Unfortunately

by Justin Weinger on March 4, 2014

The average American continues to struggle when it comes to saving money due to problems like prolonged unemployment, underemployment and stagnant wages. Homeownership has also become an exceedingly poor option when it comes to building wealth, something that has affected many families across the country negatively, including most significantly how much they’ve been able to save for retirement and emergencies.

According to a survey that was recently released, only 1/3 of Americans reported that they are making “good” or “excellent” progress with their savings, while almost 2/3 are simply making “fair” or even “no” progress at all. The survey also found that, regardless of how much income they were making, most Americans are spending more than they make.

Stephen Brobeck ,the executive director of the Consumer Federation of America, said that “only about one third of Americans are living within their means and think they are prepared for the long-term financial future.” The CFA commissioned the survey along with the American Savings Educational Council as well as the Employee Benefit Research Institute.

Brobeck added that “one third are living within their means but are often not prepared for this long-term future.” He also added that one third are struggling to live “within their means.”

The recently released survey included 1000 adults and is part of an initiative by local, state and national organizations to not only promote savings but also help people assess their savings status. Unfortunately it found that the average American doesn’t even have a plan of where to start when it comes to savings. For example, only 40% of Americans have a budget that includes a savings plan.

The fact is, people who most often reach their savings goal are those who planned for saving and calculated how much they were going to need. They do things like set up automatic savings for an emergency fund, for retirement and for college, either through their employer or their personal bank. The survey also found that families with low incomes between $25,000 and $50,000 a year have the most difficulty saving.

Another disturbing fact of the survey is that only one third of Americans have a sufficient emergency fund in this earnings group, compared with 80% of those others who make between $50,000 and $100,000 a year. Still, this fact points out that almost 20% of “high middle earners” also don’t have enough money saved for an emergency.

These problems stem from the fact that fully 1/5 of higher income Americans spend more than they make. While this is a better percentage than lower income Americans, it still is a significant number and a big part of the overall savings problem.

Another disturbing statistic revealed that over 30% of American consumers have absolutely no retirement savings whatsoever. Gail Cunningham of NFCC, an America Saves partner organization, asks “How did you pay for your last emergency? If it was with a credit card, that’s a red flag.” She added that “Americans with no money socked away for the inevitable rainy day are on a slippery slope. When money is tight, it’s difficult to think about saving. However that is when an unplanned expense can be most devastating financially.”

Cunningham added that “the more people make, the more they spend.” Her advice was that, when you get a raise or bonus, you should pretend that it never happened, live according to the budget you previously had and put that extra money directly into a savings or retirement account.

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