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.