Survey notes recession's adverse impact on savings

WASHINGTON (2/26/09)--The second annual America Saves Week survey revealed declining percentages of Americans who believe they are saving enough for retirement and expect to pay off their home mortgage before retirement.

However, the survey also found that more Americans are concerned about the impact of the current recession on their personal finances (77%) with over half (53%) being "very concerned."

The survey was commissioned by America Saves and the American Savings Education Council. It was conducted by Opinion Research Corp. Results were announced Monday.

Comparing the data collected by the 2008 and 2009 February surveys reveals some of the impacts of the current recession on consumers:



The proportion of respondents who indicated they are saving enough for retirement declined to 49% from 52%. Those who said they are saving for retirement in workplace programs fell to 51% from 55%;


Mortgage holders who said they expect to pay off their mortgage before retirement fell to 74% from 76%. And the proportion of Americans surveyed who said they own property and either have no mortgage debt or are paying down this debt declined--to 62% from 67%; and


The proportion of respondents who said they do not spend all their income but save the difference fell slightly--to 73% from 74%. Respondents who said they have "sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit" rose slightly to 72% from 71%.



"For most Americans, to-date recession-related financial concerns have been greater than financial losses," noted Stephen Brobeck, Consumer Federation of America executive director and a leader in America Saves. "But tens of millions who still have their jobs and have suffered little or no loss of retirement savings worry that a deepening recession will eventually cost them income or even their jobs."

Americans can better prepare for an uncertain future by understanding their financial condition, developing realistic spending and savings plans, and saving automatically, survey analysts concluded. However, only about half the country have taken these prudent financial measures.

The survey also indicated:



Little more than half of respondents (54%) know their net worth, the same percentage as last year.


Three-fifths (60%) have a savings plan with goals, but less than half (47%) have a "spending plan that allows you to save enough money to achieve the goals of your savings plan." These percentages are down a little from last year's 62% and 49%, respectively.


Less than half of respondents (42%) save automatically, outside of work, through regular preauthorized transfers from checking to savings or investments. This percentage of "automatic savers" did not change from last year.


The good news is that more consumers are making an effort to pay down and pay off consumer debt. The proportion who said they are reducing this debt rose to 44% this year from 38% in 2008. And those who said they are now consumer "debt-free" rose slightly to 40% from 39%.



"Research shows that those who plan borrow less and save more," said Brobeck. "And anyone, regardless of income, can develop useful spending and savings plans."

A number of credit unions across the country are active in America Saves Week, which ends Sunday.

courtesy of cuna.org