Are you familiar with America Saves Week? This effort from the Consumer Federation of America and the American Savings Education Council is designed to help Americans understand the importance of good savings habits and to raise awareness of ways to improve their savings practices. America Saves Week in 2016 ran from February 22 to the 29th. For more details on the organization, see their website.
Each year, America Saves Week has a corresponding survey to study the savings needs and habits of America, and releases the results of the previous survey at the beginning of the next America Saves Week. This year, the survey shows that a majority of Americans are struggling to meet their savings needs. Only 40% of respondents considered their progress toward their savings requirements to be either good or excellent.
Many individual savings goals fall reasonably close to that range. 52% of respondents believe that they are making progress in saving enough to retire with a "desirable standard of living" and 49% were able to make progress in saving at least 5% of their income. Other areas where progress is slow: 43% of respondents engage in automatic saving outside of their work and only 38% are not carrying consumer debt.
At least for the majority of respondents, some progress is taking place. 70% of respondents made some progress toward their savings goals, 66% reported saving at least a part of their income, and 63% believe they have sufficient emergency savings for the occasional unexpected expense like car repairs.
There is a gender difference in savings results, with men consistently reporting more positive results than women do. Differences range anywhere from 5% to 13% on issues such as spending less than income, making good savings progress, saving at least 5% of income, and saving for retirement. Given that men have greater incomes than women on average, these results come as no surprise.
As for retirement saving habits, those who reported not saving enough for retirement cited high day-to-day expenses (27%) and debt and related expenses (25%) as the largest obstacles. Mortgage/housing expenses (16%) andeducation-related expenses (12%) also played significant roles.
A significant number of respondents showed willingness to participate heavily in employer retirement plans with auto-escalation. 82% were willing to contribute at least 3% of their salary to such a program, and 40% were willing to contribute 10% or higher. There was less enthusiasm for a state administered IRA plan with 3% annual contributions. In that case, the responses were split almost evenly between less than 3% contribution, 3% exactly, and more than 3%.
How can you improve your savings habits? Experts suggest starting with a plan, and the survey results bear that out. Respondents with plans reported better results than those with no plan in such categories as reducing or eliminating consumer debt (85% to 64%), having sufficient emergency savings (79% to 46%), making good or excellent savings progress (55% to 23%), and knowing their net worth (61% to 33%).
Understanding net worth is a great first step to creating a savings plan. Too many people overestimate their financial strength until they see their assets and liabilities laid out on paper. This provides incentive to save more and to create a budget as part of a savings plan.
Help is available through educational programs such as Better Money Habits, an online partnership between Bank of America and the Khan Academy. America Saves can also provide helpful tools and links to help you meet your savings goals. Use the momentum of America Saves Week to assess your financial situation and readjust your plans — or, if you do not have a plan and a budget, to create one. You could be a success story for the next America Saves survey.
Photo ©iStock.com/frankreporter, Infographic by americasavesweek.org