America Saves Week – but Americans’ savings still weak

Despite an improving economy, an increasing number of Americans are worried that the lingering effects of the recession will diminish their personal wealth, according to a new poll.

Those who adhere to a financial plan save more money than those who don’t and are more likely to reduce their debt, said the survey, which was released on Tuesday as part of America Saves Week.

The poll of 1,000 adults in early February, commissioned by America Saves and the American Savings Education Council, shows that 49% are “very concerned” about how the recession will affect their financial status, up from 43% in a similar poll conducted one year ago.

In technical terms, the economy is no longer in a recession. But the overall improvement nationally is not yet being felt widely on the individual level due to continuing problems in the housing market, frozen or reduced pay levels and cuts in employer-sponsored benefits, according to Stephen Brobeck, executive director of the Consumer Federation of America and founder of America Saves.

“Middle class families do not appear to be faring as well,” Mr. Brobeck said on a Tuesday media conference call. His organization is one of the sponsors of America Saves Week, an effort undertaken by hundreds of groups across the country to foster a savings culture in the U.S..

Mr. Brobeck is concerned by several downward savings trends illustrated by the survey. For instance, the percentage of people spending less of their income and saving the difference declined from 73% to 71% over the last year. Those who are saving enough for retirement fell from 60% to 55%.

More encouraging, Mr. Brobeck said, is that people with a savings plan rose from 55% to 57% and those saving for retirement at work increased from 49% to 54%.

Following a financial plan is fundamental to building a nest egg, according to the survey. For instance, close to nine out of ten respondents with a plan are likely to spend less than their income compared to half of those without a plan.

Savings advocates say that investment advice can bolster a savings regime.

“When someone has a financial plan and a financial professional, you do a much better job and are much more confident,” said Catherine Smith, CEO of ING U.S. Retirement Services, who participated in the media briefing.

More and more companies are establishing programs to connect their employees to financial professionals for one-on-one advice, according to Dallas Salisbury, president and chief executive of the Employee Benefit Research Institute in Washington.

Additionally, people can find encouragement to save more outside of the office, Mr. Salisbury said. For instance, Bank of America has instituted a program that rounds up to the nearest dollar purchases customers make on their debit cards. The difference is deposited in their savings accounts.

ING has launched a campaign called Retirement Raise that encourages workers to devote to their retirement savings the 2% payroll tax deduction in effect this year.

“All of these things can be deemed as falling into the financial advice sector,” Mr. Salisbury said.

States like Washington are urging their residents to bolster their nest eggs through savings programs – even if they only consist of $25 each month.
“Saving is for everyone, said James McIntire, Washington state treasurer, “not just the wealthy.”