Savings rates in the U.S. have plummeted to a five-year low, according to the U.S. Bureau of Economic Analysis. A recent study by hybrid digital bank PurePoint Financial finds that Americans cite rising health care costs and living expenses as the main drivers of their financial pessimism. Moreover, 64% now define the American dream as not living paycheck to paycheck, and 75% believe it is harder to get ahead today than it was five years ago. Half don’t expect to feel better about their savings five years from now.
But despite concerns for their long-term finances, nearly half of respondents don’t save in a retirement plan, and one-third save 10% or less per paycheck in a savings account. Even though technological innovations have brought a wealth of digital financial planning tools into the market, only 7% of respondents said they use a savings-specific app.
“Sometimes in the face of uncertainty, people tend to freeze and not take any action at all,” says Pierre P. Habis, president of PurePoint. “The best advice I can give people is to always plan for tomorrow by saving what you can, ideally at least 10% of your income. But even if you can’t put that much aside, set up a system to save a set amount each month. Prioritizing saving on a regular basis can make all the difference.”
However, the survey also found that 20% qualified as “super savers” or “most likely to set aside a large portion of income regularly for savings and demonstrate consistent habits that help them successfully save.” Of these, 40% predetermine an amount that is automatically deposited into savings from each paycheck they receive.
These findings are from PurePoint’s State of Savings in America, an online survey of 6,001 adults at least 18 years of age, in the U.S. The research was commissioned by PurePoint Financial and produced by independent research firm Edelman Intelligence. It was collected between July 20 and August 3.