Two-fifths (38%) of American households feel they are making good or excellent progress in meeting their savings needs, the 10th annual America Saves Week survey found, while more than one in four (27%) aren’t making any progress at all.
This is according to research sponsored by the Consumer Federation of America and the American Savings Education Council. The two organizations looked at data from the past 10 years and found that savings efforts have worsened. For example, in 2008, 53% of the population saved 5% or more of their income. That has continued to steadily tick down to 48% in 2017.
The percentage of people who save no income (23% in 2008) rose in the interim to a high of 29% in 2013 but has returned to 23%. Ten years ago, 71% of the population reported having sufficient emergency savings, but that is only 65% today. And the percentage of people who believe they have or will have sufficient retirement funds has declined from 58% to 54%.
In addition, during this time, the percentage of those who know their net worth declined from 54% to 47%, while those with a savings goal sank from 62% to 52%. Participation in workplace retirement plans dropped as well (55% versus 49%).
“The most surprising result was the continuing decline in those who have a goal,” said Stephen Brobeck, executive director of the Consumer Federation of America, speaking during a webcast on the survey findings. “This is one of the sharpest declines I have seen, and the long-term trend is unmistakable.”NEXT: Saving outside of work
The percentage of those who automatically save outside of their workplace retirement plan, however, ticked up from 42% to 43%.
Brobeck attributed these slightly more dismal results to the Great Recession of 2008. He pointed to the Federal Reserve Board’s Survey of Consumer Finances, which shows that between 2007 and 2013, Americans’ median net worth declined by 40% from $135,400 to $81,200.
Brobeck noted that in the 10 years since the Great Recession, the economy has improved—but Americans’ savings habits have not, which the Federation finds surprising.
The survey also found that as income rises, so does savings progress. Only 14% of those making less than $25,000 a year have good or excellent savings progress, and this rises to 52% for those making $75,000 to $100,000 a year.
As to what Americans can do to improve their savings, Brobeck said: “We strongly encourage all Americans to save at work—and at your bank or credit union. Also, when you are maintaining your bank account, tell your bank or credit union that you want to automatically transfer a certain sum from checking to savings every month. Those with modest incomes should focus first and foremost on building emergency savings.”
ORC International conducted the telephone survey of 1,007 adults in late January for the two trade groups.