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Survey: Americans Believe Savings Are Adequate

Optimism may be unfounded, experts fear

By Martin H. Bosworth
ConsumerAffairs.com

February 26, 2008

The survey of over 1,000 Americans, conducted in early February, found contradictory attitudes about saving: 71 percent of the respondents claimed they had sufficient emergency savings for unexpected expenses, but 57 percent said they were not saving sufficently for retirement.

Of the respondents, 55 percent claimed they did not have access to a 401k retirement plan through their employer, or did not contribute sufficiently to the plans they had.

Twenty-one percent of the respondents said that their consumer debt levels were growing or remaining stable, while 76 percent who held mortgages said they would pay off their mortgage before retirement.

Stephen Brobeck, executive director of the Consumer Federation of America (CFA), said that, "Hard data about savings behavior suggest that responses to several questions were buoyed by the personal optimism of respondents."

The survey found that the highest indicator of savings knowledge among the respondents was income level. Eighty-one percent of the high-income respondents (making $75,000 or more), but only 34 percent of the low-income group ($35,000 or less), reported saving at least 5 percent of their income.

Higher-income respondents were also more knowledgeable about saving through automatic transfers from checking accounts, investing financial windfalls, and calculating their net worth than lower-income respondents.

"A low income certainly makes it difficult to build adequate retirement savings but does not prevent developing saving and spending plans," Brobeck said.

The survey was promoted by America Saves in conjunction with groups such as the CFA and the American Savings Education Council (ASEC), as well as the Federal Reserve. The survey kicked off "America Saves Week," an initiative lasting from February 25 to March 2, designed to promote the need for greater savings and investment among the public.

"The long-term goal of the Week is to persuade thousands of organizations to encourage millions of Americans to assess their savings progress and take action to advance this progress," said ASEC chairman Dallas Salisbury.

Last year's America Saves survey found that the young, poor, and minorities had little or no emergency savings funds set aside, but that the majority of respondents also felt their savings levels would be sufficient to deal with unexpected expenses.

The CFA conducted a separate survey in conjunction with Wachovia Bank in December 2007, finding that the respondents were much more pessimistic about their ability to save. A large majority of the respondents blamed emotional "impulse spending" and spiraling credit card debt as barriers to implementing better savings habits.

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