Debt, Education Expenses Hindering Retirement Savings Progress

In addition, about one-quarter (27%) of surveyed Americans say the main factor preventing them from saving for retirement is high day-to-day expenses.

The ninth annual America Saves Week survey has found that only two-fifths (40%) of U.S. households report good or excellent progress in “meeting their savings needs.”  

Less than half (49%) say they are saving at least 5% of their income; 52% say they are saving enough for retirement with a “desirable standard of living,” 43% report some kind of automatic saving outside of work, and 38% report they have no consumer debt.

Responses to other questions, however, suggest that around two-thirds of Americans are making at least modest savings progress: 70% report at least some progress in meeting savings needs; 66% say they save at least some of their income; and 63 percent report “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.”

More Men Than Women Report Saving Progress 

On 12 separate questions on various financial well-being indicators, men’s responses were more positive than women’s responses, with differences ranging from five to 13 percentage points.  For example, 74% of men, but only 67% of women, report they were making saving progress, and 44% of men, but only 36% of women, report good or excellent saving progress.

Similarly, 72% of men, yet only 60% of women, report they are spending less than income and saving the difference. This gender gap persisted for those saving at least 5% of income—54% of men and only 45% of women.

During a media call, Stephen Brobeck, executive director of the Consumer Federation of America and a founder of America Saves, said these gender differences were not surprising because men tend to have more income and assets than women.

NEXT: Retirement savings shortfalls

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%) said "yes." That figure is down three percentage points from last year (55%) and down six percentage points from 2008 (58%).  Moreover, there was a significant gender gap: 57% for non-retired men, and 47% for non-retired women.

While these findings are discouraging, Harry Conaway, chairman of the American Savings Education Council, told reporters the positive could be that as individuals become more educated and begin planning, they grow more realistic about their retirement savings needs.

For those non-retired persons who say they are not saving enough for retirement, about one-quarter (27%) say the main factor is high day-to-day expenses, and another one-quarter (25%) say the main factor is debt and related expenses, with about half this group (12%) citing education expenses and debt.  For those younger than 45, 22% cite education expenses and debt as the main reasons for not saving enough. For those older than 45, the most cited reason (16%) after day-to-day expenses is mortgage or housing expenses.

For the first time, the annual America Saves Week survey asked for respondents’ views about participating in retirement programs. When asked the highest percentage of their salary that they would contribute to a plan offered by their employers with auto-escalation, more than four-fifths (82%) indicated they would contribute more than 3%, with 40% indicating they would save 10% or higher. 

Conaway says this suggests more employees would be open to automatic enrollment and automatic deferral escalation than retirement plan sponsors think.

Also, when asked what they would do if their employer did not offer a retirement plan and they were automatically enrolled in an IRA administered by their state government with a default annual contribution of 3%, roughly equal percentages said they would contribute less than 3% (32%), 3% (31%), and more than 3% (28%). 

NEXT: Those with a plan for saving are more successful

The survey findings reveal that those with a “savings plan with specific goals” save more successfully than those without a plan. Sixty-one percent of those with a plan for savings know their net worth, versus 33% without a plan. Eighty-five percent of those report no or reducing consumer debt, versus 64% without a plan. Eighty-four percent of those with a plan say they are spending less than income and saving the difference, versus 46% of those without a plan.

In addition, more of those with a “savings plan with specific goals” report sufficient emergency savings than those without a plan (79% vs. 46%); automatic savings outside work (60% vs. 26%); and making good or excellent savings progress (55% vs. 23%).

Income appears to be correlated with some but not all of these differences. More specifically, the financial well-being indicator gaps between those who plan and do not plan are always larger than those gaps between households with annual incomes of $25,000-$50,000, and those households with incomes above $100,000.

Brobeck said there is hope; he suggests low-income workers be encouraged to start with saving their loose change. And, he says, all households can save more with a specific plan and goals.

“The survey responses underscore how important it is for all retirement industry players and policymakers to educate employees and support key savings goals,” Conaway concluded.

The research included responses from a representative sample of 1,004 adult Americans between January 28 and 31.

More about America Saves Week, including a toolkit, can be found at