Research and Statistics

Survey: Recession still hurting saving, retirement funds


A national survey finds that the lingering effects of the recession are causing more Americans to become concerned about its impact on their personal finances.

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Though the economy has begun to recover, high rates of unemployment and other enduring effects of the Great Recession are still eroding millions of Americans’ ability to save for the future — as they continue to struggle with credit card and other debts, according to a survey released Tuesday.

The survey of America’s savings habits found that despite a general sense that the overall economy is beginning to rebound, 21 percent of all Americans are failing to make progress in reducing their debts, inhibiting their efforts to create a regular savings plan. That finding shows no improvement over last year.

The survey also found that 49 percent of the respondents described themselves as “very concerned” about the recession’s persistent effect on their household finances, compared with 43 percent a year ago.

The survey was conducted for America Saves, a national coalition of more than 1,800 organizations that encourage Americans to save, and for the American Savings Education Council, managed by the Employee Benefit Research Institute. Release of the report marks the beginning of the fifth annual America Saves Week. (Article continues below.)

More Americans are concerned about the recession’s impact on their personal finances than a year ago, and good savings habits are showing signs of slipping, says the fourth annual America Saves survey released Tuesday.
Savings activity or attitudeFebruary 2010February 2011
I’m very concerned about the recession’s impact43%49%
I spend less than my income, save the difference73%71%
I’m reducing consumer debt or am debt-free79%79%
I have sufficient emergency savings71%70%
I’m building equity or have paid off my mortgage68%65%
I’m saving enough for retirement60%55%
I expect to pay off my mortgage by retirement78%75%
Source: America Saves and the American Savings Education Council.  The organizations commissioned a survey, undertaken by Opinion Research Corp., in early February, of a representative sample of more than 1,000 adult Americans.

Recession’s ‘lingering effect’

“Our most important finding is that the Great Recession has had a lingering effect on these savings and other practices,” Stephen Brobeck, executive director of the Consumer Federation of America and a founder of America Saves, said Tuesday. “The recession clearly has not ended for millions of Americans.”

He noted that evidence continues to mount of fundamental changes in the American workplace and, as a result, in the ways that Americans wrestle with credit card and other debts and struggle to save for emergencies and retirement.

These changes range far beyond the problem of chronic unemployment. Many people who still have jobs, for instance, have not received a pay increase in years, even as they are required to contribute more to their health insurance and other benefit plans.

“They are spending down the savings they have,” Brobeck said. “So, they are worse off than they were a year ago.”

“The persistence of high unemployment rates, large consumer and mortgage debts and the housing crisis may help explain the lack of saver progress,” Brobeck said.

Dallas Salisbury, chief executive officer and president of the Employee Benefit Research Institute, drew a similar conclusion. “This survey and our other retirement surveys suggest that most American families continue to face stiff challenges,” he said.

A few hopeful signs

Salisbury noted, however, that “there is some good news along with the sobering news.”

For instance, Americans with a savings plan rose slightly to 57 percent from last year’s 55 percent, those who are saving for retirement at work rose from 49 percent to 54 percent, the number of Americans who are saving through automatic plans outside of work edged up to 44 percent from 41 percent. (Other studies have shown that the overall savings rate has increased substantially in recent years, though not necessarily for the hardest-pressed Americans.)

The tentative signs of trickle-down economic improvement reflected by the America Saves survey tend to mirror other news suggesting a consumer recovery that seems evident, though slow and often painful.

  • The Federal Reserve reported Feb. 14, 2011, that consumers are beginning to open credit card accounts again, after a lengthy downturn in that metric. In the fourth quarter of last year, Americans held 380 million open credit card accounts, a slight rise from the 378 million accounts that were open during the third quarter of 2010.
  • The number of U.S. mortgage holders who fell behind on their payments or were in foreclosure dropped to 12.9 percent in December 2010 from 14 percent the year before, according to the Mortgage Bankers Association.
  • At the same time, the unemployment rate fell to 9 percent in January from 9.4 percent in December and 9.8 percent in November, though it remains stubbornly high and a source of enormous financial pain and emotional distress for millions of Americans.

All in all, experts say, it adds up to a muted recovery that complicates efforts to save at the very time that more people should be reducing their credit card and other debts and saving for the future.

“How are we to square the results we’ve seen with increasingly positive macroeconomic indications?” Brobeck asked. “One reason may be that these indications report how businesses and upper-income people are doing, but many middle-class people and others are not doing as well.”

More than 100 major governmental, nonprofit, military and industry organizations are participating in America Saves Week, encouraging Americans to get their credit card and other debts under control and engage in a regular savings plan at work and at home.

“Our central message is to build wealth and not debt — to plan for your future,” Salisbury said.

The survey released Tuesday was conducted by the Opinion Research Corporation and included interviews with a representative sample of more than 1,000 American adults during early February. The margin of error was plus or minus 3 percentage points.

See related:  Number of credit card accounts rises for first time in two years

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