Wachovia Bank Survey: Americans Are Not Saving Enough
By Martin H. Bosworth
ConsumerAffairs.Com
Impulse spending, economic problems cited as obstacles
Fifty-two percent of Americans say that they aren’t saving enough money. Many are saving nothing at all and are pessimistic about the nation’s overall savings rate.
The survey was conducted for Wachovia bank and the Consumer Federation of America.
“This survey is far and away the most extensive we’ve undertaken and provides new insights into not only how Americans save but why they do or don’t,” said CFA Executive Director Stephen Brobeck. “Among other findings, it reveals the importance of socio-psychological barriers to saving and easy access to attractive accounts.”.
Many respondents cited economic issues are the major barrier to savings; 72 percent cited unexpected major expenses, as well as variable incomes due to job loss and consumer debt.
Impulse spending was a barrier for 37 percent while while 29 percent said that “spending to feel good” was a problem.
Many blamed credit cards for their failure to save; 82 percent of the respondents said that avoiding credit card debt was the most effective saving strategy to employ.
National Debt
The survey found Americans gloomy about the country’s overall savings picture, with 79 percent of the respondents saying that Americans are saving “inadequately.”
“Americans are pessimistic about how other Americans are saving and how they will save in the future,” Brobeck said. “In part, this pessimism probably reflects widespread press coverage about the country’s zero or near-zero personal savings rate.”
Individuals with higher levels of income believed they had a better chance of saving effectively. Respondents making $75,000 or more were roughly twice as likely to say that they had saved enough money for emergencies or retirement investing as those making $25,000 or less.
Young adults (18-24 years old) were the most likely demographic group to say they are not saving adequately, at 62 percent versus 52 percent for all Americans.
Interested In Interest
Individuals who were saving inadequately or not at all overwhelmingly cited easy access to tools like high-interest savings accounts, 401(k) retirement plans, and automatic transfers from checking to savings accounts as a primary encouragement to save more.
The biggest boon for savers, according to the survey, was educating inadequate savers as to how interest can compound daily in certain accounts. When the survey respondents were told that saving $200 a month for 30 years at 5 percent interest would net them over $300,000, 80 percent responded that it was a positive inducement to save.
“Knowledge of the ‘miracle’ of interest compounding clearly can have a significant influence in persuading Americans to save more effectively,” said Wachovia senior vice-president Kathryn Black.
The survey’s summarized findings are available as a free PDF download from the Consumer Federation of America’s Web site.
http://www.consumeraffairs.com/news04/2007/12/savings_study.html
