With a divide among employer populations, a new survey meant to kick off America Saves Week finds that savings challenges remain as employees struggle to save what they can, both for their immediate needs and their eventual retirement.
America Saves Week, Feb. 24 to March 1, is a coordinated effort to raise employee awareness of the importance of actually sitting down and making concrete savings plans, through a company sponsored 401(k) or other savings vehicles.
The seventh annual savings survey, created by the Consumer Federation of America and the Employee Benefit Research Institutes American Savings Education Council, finds that only one-third of the 1,000 adults polled feel they are making good or excellent progress as the remaining 63% list that they were making fair or no progress in meeting their savings needs.
This years surveys shows that the savings glass can be viewed as half full or half empty, says Stephen Brobeck, executive director of CFA and a founder of American Saves. He notes that 35% were making progress on their savings goals.
However, he reports that about one-third are barely saving, as they say they are spending less than their income and have emergency savings, but many dont think they are saving enough for retirement. The final one-third is not saving at all, Brobeck explains.
Even worse the total number of Americans with savings and spending plans declined, which may point to this years findings. From 2013, the proportion of Americans with a savings plan with specific goals declined by three percentage points to 51% in 2014. Also, dips were reported among those with spending plans with a sufficient saving, declining from 43% to 40% in 2014.
According to Dallas L. Salisbury, president and chief executive officer of the EBRI and chairman of the American Savings Education Council, employers can assist with the current savings epidemic.
Employers can play a vital role by encouraging and making it easier for employees to participate in savings and retirement programs, Salisbury says, through payroll deduction, the use of automatic enrollment and the opportunity to support automatic contribution increases. Automatic contribution increases in defined contribution retirement plans were previously lauded by researchers from the University of Illinois and the American Council of Life Insurers.
Referencing the EBRIs 2013 Retirement Confidence Survey, Salisbury explains that workers who conducted retirement-needs calculation were more confident to save what is needed for retirement. Complementing this goal, he says that the theme for this years America Saves Week is to set a goal, to make a plan and to save automatically.
We really need to dramatically change how people save in this country, says Stig Nybo, president of pension sales and distribution at Transamerica Retirement Solutions. Transamerica serves as one of the 1,900 organizations that are coordinating in the saving effort, according to Salisbury.
A plan to increase savings is definitely needed as numbers correlate to figures from last year when assessing sufficient emergency savings and reducing consumer debt. The survey finds that that 64% say they have enough put away for emergencies and three-quarters report they are cutting away at debt or are debt-free.
Also, the survey found that higher incomes led to the ability to save adequately. Among middle-class families, ranging from $25,000-$100,000, savings level reported a variance.
We believe that the main factor here is the continuing struggle of many middle class families to rebuild their finances as the recovery of the great recession began, especially after unemployment rates started declining at the end of 2010, says Brobeck. More than three years later, many families are still struggling to do so.
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