National research about consumer finances shows that only about half of working Americans consider their retirement savings plans adequate, and only slightly more than half have more emergency savings than credit card debt.
The Consumer Federation of America annual savings survey released Monday said 49 percent of working Americans are confident their retirement plan will provide “a desirable standard of living.”
Also Monday, Florida-based financial analysis firm Bankrate.com said recent research shows that only 55 percent of Americans hold emergency savings balances that are greater than what they owe in credit card debt. The figure is little changed from last year's.
Overall, about half of Americans have good savings habits, according to the Consumer Federation survey of 1,000 people, with overspending and failing to contribute to workplace 401(k) plans among the main impediments to higher savings.
The relationship between overspending, too much credit card debt and anxiety about retirement deserves immediate attention from U.S. households, said Stephen Brobeck, executive director of the Consumer Federation, speaking on a conference call Monday.
“It is imperative that families pay down high-cost debt,” Brobeck said, so they can devote a greater share of earnings to building savings accounts.
Failing to enroll in available 401(k) plans earned people heavy demerits on the savings report card. Jeanne Thompson, vice president of retirement and market insights at Boston-based Fidelity Investments, the nation's largest provider of such plans, said on the conference call that one-third of people eligible to enroll in a 401(k) program decline to do so.
The Washington-based Consumer Federation survey was released in conjunction with what the organization calls “America Saves Week,” an effort to encourage stashing away money for the future. The organization said more than 1,300 groups, such as the U.S. Treasury Department, wealth manager Fidelity and North Carolina-based bank BB&T Corp., participate in America Saves Week.
Greg McBride, an analyst at Bankrate.com, said higher savings rates are a must. Americans are “woefully” unprepared for financial emergencies such as a big unexpected expense or loss of income, he said.
“The easiest path to savings is to have it automatically deducted from your paycheck and deposited into an account,” McBride said. “The true definition of wealth is living on less than you earn.”
Government agencies involved in America Saves Week include the Defense Department, through the “Military Saves” initiative. Its website shows that local participants this year include SAC Federal Credit Union, Consumer Credit Counseling Services of Nebraska, Great Western Bank and U.S. Bank.
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