Almost Half of Americans Aren't Saving Nearly Enough

A strong wind would topple almost half of Americans’ nest eggs, according to a Monday report from Bankrate.com. A reported 46 percent of the country’s consumers store less than 5 percent of their annual incomes into longer-term savings.

The study, which surveyed 1,000 adults living in the continental U.S. earlier in March, found that 18 percent of the U.S. was saving virtually nothing from year to year. Another 28 percent was building savings but hoarding less than 5 percent of annual incomes.

And even those who are saving that 5 percent aren’t doing nearly enough, says Greg McBride, a chief financial analyst at Bankrate.com.

“People are woefully under-saved, for both emergencies and retirement. I think these numbers tell us why. Not enough people are saving. Not enough people are saving enough,” he says. “But there are those that are doing it. Almost a quarter of the population is saving more than 10 percent of their income. And even the lowest income households, about one in five, is saving more than 10 percent of their income.”

McBride says Americans who are thinking about both retirement and emergency savings should be putting away roughly 15 percent of annual incomes each year. He says that goal may, for many consumers, “seem like a long way off, but it’s a destination. That may not happen overnight.”

About one in four Americans (24 percent) are saving more than 10 percent of their paychecks each year, according to the study. Members of the middle class with incomes between $50,000 to $74,999 seem to be the most active savers – 35 percent of the group saved more than 10 percent of their annual incomes last year.

“The best savers are not the highest income households. They’re middle income households,” says McBride. “Saving is not a function of income. It’s a function of having the ability to live within your means and save consistently.”

The savings study released Monday trails a February Bankrate.com report suggesting 37 percent of Americans have credit card debt greater than or equal to their emergency savings. Such consumers could be pushed over the fiscal cliff by an unexpected medical bill, car accident or other surprise expense.

“We’re seeing pretty much the same numbers every year, which shows that people really aren’t prioritizing savings still,” Jeanine Skowronski, a senior credit card analyst and reporter at Bankrate.com, told U.S. News in February. “The recession’s over, but there’s still some lagging effects that can be affecting some people’s pockets.”

A November report from Springleaf Financial notes consumers should have a minimum of three months’ worth of expenses built up to provide cushion in the event of a potential job separation or unexpectedly large payment.

But the study found 43 percent of the U.S. wouldn’t be able to go more than a month without a paycheck. And almost one in five Americans (19 percent) couldn’t miss a single payday without needing to borrow money or sell assets.

“We know full well that with rising costs and unexpected expenses, consumers may have a tough time making ends meet,” David Hogan, a senior vice president at Springleaf Financial, said in a statement accompanying the report. “However, we were surprised to see that nearly 20 percent of adults don’t have enough of a cushion to last two weeks without a paycheck. What was especially surprising is that this is true across all education and salary levels.”

The study found that 24 percent of consumers have less than $250 in their bank accounts immediately preceding payday, and more than a quarter of respondents said they save cash rarely, inconsistently or not at all.

And Monday’s Bankrate.com report suggests only 24 percent of respondents are more comfortable with their level of savings now as compared to a year ago, while 27 percent are less comfortable.

McBride notes that the study is not meant to “gloss over” low wages or areas with relatively high costs of living. It’s important to note that only 12 percent of individuals who earn less than $30,000 each year save more than 10 percent of their annual incomes.

But for those who have the ability to save, McBride says discipline will go a long way toward setting one’s self up for comfortable retirement and cushion from surprise expenses.

“The other thing savings does is give you opportunities. … You get a call from your college roommate who says, ‘Hey, good news. I’m getting married, and I want you to be there.’ You have to buy plane tickets, you have to rent a tux, the whole nine yards,” McBride says. “Emergency savings is your sleep-at-night money. That’s what’s going to help you sleep at night, knowing that you’ve got money tucked away for a rainy day or whatever else life throws at you.”