Americans are struggling to rebuild their savings after the recession, according to the Consumer Federation of America’s seventh annual national survey. Almost two-thirds said they were making fair progress at best.
“This year’s survey shows that the savings glass can be viewed as half full or half empty,” Stephen Brobeck, executive director of the Consumer Federation of America and a founder of America Saves, said in a teleconference announcing the survey.
Although many are struggling to save, most are able to meet their day-to-day financial obligations, according to the report. More than two-thirds said they were spending less than they make and saving the rest, up from 65% in 2013. Furthermore, 64% said they had enough emergency savings and 76% were either reducing their debt or already debt free.
However, “a third of households are barely saving,” Brobeck said. “They’re spending less than their income and have emergency savings, but many don’t think they’re saving enough for an adequate retirement.”
Brobeck said there were two factors explaining differences in savings progress.
“The most important, predictably, is income. The higher one’s income, the more likely one is saving adequately, but what’s especially noteworthy is there are sharp differences in saving adequacy within the middle class.”
Americans with annual household incomes between $25,000 and $50,000 were much less likely to report good savings habits than those in higher income groups. For example, 69% of those in the lowest income group were spending less than they made and saving the difference, compared with 82% of those with between $50,000 and $75,000 and 81% of those with more than $75,000.
While more than three-quarters of the lowest income group said they were reducing their debt or had none, they lagged the higher income groups: 88% and 91%, respectively. The percentage of lower-middle-class Americans with a sufficient emergency fund lagged the higher income groups by 20 points at 63%.
“While planning is correlated with income, the relationship is far from perfect. Many low-income households plan and many upper-income households don’t,” Brobeck said.