(Photo: Flickr/Simon Schoeters)

Americans are saving for retirement, but many are also spending at a rate that will prevent them from enjoying the kind of retirement they dream of, according to a report released this week by Personal Capital, an online financial advisor firm.

“We’re experiencing a volatile market that is out of our control, but our incremental day-to-day spending is something we do have control over,” Personal Capital’s chief executive Bill Harris said in a statement. “And more importantly, daily spending habits have a real impact on the amount of money we need to retire.”

Indeed, 60% of Americans in a poll released in August by Personal Capital said they were not prepared for a bear market, and had taken no precautionary steps for a potential economic downturn.

The new study examined spending at merchants and within categories, against demographics like age, to show how much Americans spend to maintain their own cost of living.

In addition, researchers analyzed spending behavior regionally to find out how people in the 50 states prioritize retirement contributions and other expenses. 

To obtain data for the study, Personal Capital analyzed the bank accounts of its dashboard users (in “a completely anonymized” way) for spending trends across a total of 148,225,107 transactions, all of which occurred in 2015.

“Our goal is to help more Americans understand how small, repeat spending decisions affect their financial standing down the road,” Harris said. “Whether it’s the choice to shop at Costco over Whole Foods, or the decision to prioritize spending on hobbies over saving for retirement, it all adds up.”

How Americans Spend

The study found that Americans like to dine out. They do so about 14 times a month.

Diners 20 to 30 years old spend 60% of their food budget on restaurants, compared with 53% for those 30 to 40 and 52% for 40- to 50-year-olds.

In addition, Americans spend more at Starbucks throughout the year than at competitors such as Dunkin’ Donuts and Peet’s Coffee: an average of $17.73 per month, versus $6.20 and $5.41, respectively.

Car service apps are making it easier than ever to throw money at a ride. Americans request Lyft rides five times more often than yellow cabs on average, for an average $18.01 per transaction, and Uber rides seven times more often, for $21.86 per transaction. Taxis tend to be pricier, at $29.20 per transaction.

The increasing popularity of ride share options is understandable when one considers that those with vehicles pay $725 a month to own, maintain, insure and fuel their cars.

When it’s time to buy groceries, shoppers frequent Kroger the most, at least twice a month. Yet they spend an average of $151.71 per month at Costco to shop in bulk, roughly 50% more than they spend at Kroger and twice as much as at Safeway, Trader Joe’s and Whole Foods.

For an average shopping trip to the mall, Americans spend more at Bloomingdale’s than at other top clothing retailers, averaging $206.95 per shopping trip, compared with $171.38 at Sears, $149.06 at Nordstrom and $106.47 at Macy’s.

Customers spend $83 a month at Nordstrom, $77 at Bloomingdale’s and $42 at Macy’s.

“Our findings show that Americans are spending — feeling confident both in the economy and in their own financial standing,” Harris said.

Retirement Prospects

How are Americans doing in amassing an adequate nest egg for retirement?

The data suggest that people are saving for their retirement. This a good thing, Harris said, although many people’s current spending rate is going to keep them from achieving their retirement goals.

“Imagine that you want to have $100,000 at your disposal each year in retirement, for example,” he said. “Your spending choices right now will need to enable you to tuck away approximately $2 million by the day you retire.”

Personal Capital analyzed retirement contributions nationwide. It found that people in 42 of the 50 states prioritized retirement contributions over any other financial expense.

The 5 states with the highest retirement contributions per person annually:

  1. Delaware: $28,248.12
  2. New Mexico: $27,930.49
  3. North Carolina: $27,143.74
  4. Nebraska: $26,420.47
  5. Louisiana: $25,690.60

The 5 states with the lowest retirement contributions per person annually:

  1. Hawaii: $17,041.47
  2. Wyoming: $16,345.62
  3. Tennessee: $16,084.73
  4. Maine: $15,481.24
  5. Rhode Island: $14,688.43

People in 8 states had financial priorities other than saving for retirement:

  1. Nevada: Insurance – $8,504.91
  2. Montana: Hobbies – $8,998.95
  3. Mississippi: Insurance – $10,033.73
  4. Idaho: Electronics – $12,490.91
  5. Arkansas: Online services – $21,038.70
  6. Michigan: Healthcare/medical – $21,962.25
  7. Texas: Mortgages – $32,386.97
  8. South Dakota: Savings – $51,373.49

Personal Capital also analyzed the average retirement savings of its users in each state and the District of Columbia. Delaware came in number one, with average savings of $286,277.12. Wyoming was last, with average savings of $153,182.46.

For Americans who are not on track to achieve their retirement goals, the August poll showed that 22% of respondents said the second biggest reason was not knowing how much they would need (the top reason was lack of savings).

For 28% of respondents, the most important factors in planning for retirement were health care, age and Social Security.

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