Savings

It has been said that Americans are better consumers than they are savers. According to the latest data from the U.S. Bureau of Economic Analysis, the personal savings rate in the United States is 5.7%. This means that out of every $100 in after-tax income Americans bring in, approximately $5.70 is being saved for things like retirement, emergency expenses, and rainy-day savings.

This is far too low to adequately prepare most people for retirement and unexpected expenses. Most experts recommend saving at least 10% to 15% of your income in order to be financially well-prepared. The personal savings rate has dramatically improved since before the financial crisis in 2008, when it hit an all-time low of just 1.9%. However, as you can see, Americans are still saving relatively little from a historical perspective.

  • The median American household savings account balance is $4,960
  • 83% of total savings are in retirement accounts (410k, etc.)
  • 30% of Americans deplete their savings an average of $14,230 every year
  • 64% said they depleted their accounts to pay bills and 57% said they did to pay for general living expenses
  • 51% of women versus 38% of men have $0 in a savings account
  • 24% don’t have savings or investment accounts
  • In 2019, 69% said they have less than $1,000 in a savings account compared with 58% in 2018
  • 19% are saving for an emergency fund, making it the second-most popular savings goal after retirement
  • Americans are more likely to be saving for a vacation than for a car, home or an education

Why are people saving less?

  • Consumer credit has made it easier not to have personal savings
  • People are living paycheck to paycheck
  • We no longer save for purchases; we buy now and pay later
  • Credit cards and home equity have replaced the savings accounts as emergency funds

It takes effort to save money, it doesn’t happen overnight. But, in order to have a sufficient rainy day fund and grow a retirement nest egg it takes planning and commitment. To learn more about what it takes to grow your wealth in a safe, predictable manner contact The Money Coach

Retirement. It means different things to all of us. What is your definition of retirement? Most will answer that it means living life while not working, in the same lifestyle in which we lived while we were working. Will you be able to do this?

Are you ready? Will you be ready?

  • Only 36% think their retirement savings is on track
  • 33% have less than $5000 saved for retirement
  • A whopping 64% had saved less than $50,000
  • Only 26% have saved more than $100,000
  • The median retirement savings for Americans between age 55 and 64 was $107,000
  • 33% of middle-class adults are unable to handle a $400 emergency (medical, auto, house)
  • 54% of them have money in a government controlled, tax qualified retirement plan (401k, 403b)
  • The median 401k balance at age 65 is $68,588
  • 33% have an individual retirement account (IRA)
  • 22% have a pension (and that number is shrinking every year)
  • Less than half of retirees have any guaranteed income other than social security
  • 25% of Americans have no retirement savings or pension at all

How much will you need in retirement?
If you are serious about your financial future, you should know the ANSWERS to these four questions . . .

1. What rate of return do you have to earn on your savings and investment dollars to be able to retire at your current standard of living and have your money last through your life expectancy?

2. How much do you need to save on a monthly or annual basis to be able to retire at your current standard of living and have your money last till life expectancy?

3. Doing what you are currently doing, how long will you have to work to be able to retire and live your current lifestyle till life expectancy?

4. If you don’t do anything different than you are doing today, how much will you have to reduce your standard of living at retirement for your money to last to your life expectancy?