Study shows most Americans have inadequate savings

A recent survey by Bankrate.com shows that millions of American workers are only a paycheck away from financial disaster. A survey of 1,000 adults found that fewer than 25 percent of Americans have six months or more of savings, an amount deemed adequate to prepare for all but the most severe emergencies.

Another 50 percent have less than three months savings and 27 percent have no savings at all, meaning they are living essentially living paycheck to paycheck, with no emergency cushion to fall back on.

The online lender CashNet.com reported that of 1,000 people it recently surveyed, 22 percent had less than $100 saved in case of an emergency. Another 46 percent had less than $800 to cover unexpected expenses. Said Megan Staton, CashNet director of marketing, “The scarcity of rainy day savings remains a concern for too many Americans, and it hasn’t improved since last year.”

These statistics underscore the hollowness of the claim by the Obama administration that the US is experiencing an economic recovery. In fact, the rate at which Americans are saving is falling, after rising briefly in the aftermath of the 2008 financial crisis when it reached a high of 5.5 percent. In 2011, it declined to 4.2 percent and further to 3.9 percent in 2012. For the first quarter of 2013, the savings rate stood at just 2.6 percent. Only 52 percent of families reported saving in 2010 compared to 56.7 percent in 2007.

Stagnant and falling wages and continued high levels of unemployment make it difficult for most families to save. A study by the University of California found that since 2009 average real income for families has grown by only 1.7 percent. But, that includes an 11 percent increase for the top 1 percent. When that is subtracted, real wages declined half a percent for the bottom 99 percent. Read more >>

Singles retire with meager savings

If you think it’s hard saving for retirement as a couple, trying doing it as a single. According to a study—described by one expert as the most intriguing of 2012—the amount of money singles in their late 60s have saved up for retirement is dramatically less than that of married-couple households.

In fact, the median married household had in 2008 nearly 10 times more saved up for retirement than the median single-person household, $111,600 vs. $12,500. (Savings, for the record, included 401(k)s and IRAs and all taxable savings and investment accounts, but it did not include Social Security, pensions, or housing wealth. And single, at least for the purpose of this research could mean divorced, widowed or unmarried for most/all of their life.)

The difference was also extreme at the extremes, according to a blog post by Steve Utkus, who oversees the Vanguard Center for Retirement Research.

In his review of the study, Utkus noted that the top 30% of married households had savings of $332,400 or more while the top 30% of single-person households had just $90,000 or more. The bottom 30% of married households, meanwhile, had less than $24,000 saved while the bottom 30% of single-person households had less than $800. Read more >>

Retirement confidence at record low

Despite improving economic conditions, a record percentage of American workers remain worried that they won't be able to afford retirement.

They're worried about their jobs, high debt levels and rising living expenses, according to a survey released Tuesday by the Employee Benefit Research Institute.

Only 13% of workers surveyed said they "feel very confident" that they will be able to retire comfortably — less than half the percentage reported in 2007. Nearly half -- 49% -- said they were "not too" or "not at all" confident.

A large chunk of the workers surveyed have little or no retirement savings. Of those who provided estimates, 57% reported household savings and investments of less than $25,000, which included 28% of respondents who said they had less than $1,000. Only 24% reported savings of $100,000 or more.

Debt is standing in the way of saving. More than half of workers reported having a problem with their level of debt, while only about half of those surveyed said they could definitely cover $2,000 worth of unexpected expenses within the next month. Read more >>

Half of Americans Die With Almost No Money

Almost half of U.S. retirees die with savings of $10,000 or less, but that grim finding doesn’t fully describe the variability and uncertainty that characterize retirement in America, according to a recent study. While some retirees struggle profoundly, living at or below the poverty line, others enjoy wealth and health—in fact, the two are strongly linked—while still others have little in savings but enjoy a decent income, according to the report, based on a survey that tracked retirees from 1993 through 2008.

While 46% of retirees have just $10,000 in savings when they die, “That doesn’t mean their standard of living is very low—they might have a relatively generous pension plan, most of them will have Social Security,” said James Poterba, professor of economics at M.I.T., president of the National Bureau of Economic Research, and a co-author of the study.

But the findings “suggest something about the financial resiliency of these households,” Poterba added. “They may not have much capacity to absorb a shock, such as an out-of-pocket medical expenditure. They don’t have very much in the way of liquid assets they can access.” Read more >>

Survey: More Than 25% of Americans Have No Emergency Savings

While nearly half of Americans don't have enough money saved to cover emergencies, one-quarter don't have any money saved, according to Bankrate.com's Financial Security Index survey. The general rule of thumb is to have enough cash saved to cover at least six months of expenses.

However, only 25 percent of Americans have saved that amount and 17 percent have three to five months' expenses saved, while 28 percent have no emergency savings and 21 percent have less than three months' expenses saved. Those earning more than $75,000 annually have higher odds of saving six months of expenses. Only 9 percent of these high earners don't have emergency savings versus 52 percent of those earning less than $30,000.

Among retirees, 41 percent have enough money saved to cover at least six months' expenses, while 26 percent have less than six months' expenses saved and 18 percent have no savings. In addition, 41 percent of college graduates report having emergency savings compared with 14 percent of those with a high school education. According to race, 23 percent of white Americans have no emergency savings compared with 38 percent of nonwhite individuals. Read more >> 

Most Americans Are Flat Broke

Most Americans don't have nearly enough money stashed away for emergencies and more than one-in-four don't even have a single penny saved. While the general rule of thumb is to have an emergency fund that will cover at least six months of expenses, only 25% of Americans have that amount saved, research released Monday by Bankrate.com finds.

About 49% of Americans don't even have enough money saved to cover three months of expenses -- slightly worse than the 46% of Americans who reported having less than three months worth of savings last year. And 28% don't have any cushion whatsoever -- up from 24% last year, according to the report, which was based on a survey of 1,000 adults. "Incomes are largely stagnant, so it's difficult for people to make significant headway on savings when household expenses are creeping higher but incomes are not," said Greg McBride, senior financial analyst for Bankrate.com.

"Prolonged unemployment has also depleted the savings of many people who at one time had a more appropriate cushion." Read more >>

No Retirement Savings for Half of Americans: Survey

Source CNN
About 49% of Americans say they aren't contributing to any retirement plan, according to a new survey conducted by LIMRA, a trade association for the financial services industry. "The findings from this survey were disturbing, given that people will increasingly need to rely on their personal savings to make ends meet in retirement," said Matthew Drinkwater, associate managing director at LIMRA's retirement research division.

People ages 18 to 34 are the least likely to be saving, with 56% reporting that they are not currently contributing to a retirement plan like an IRA or a 401(k). "In order to have the adequate savings necessary to meet their financial needs in retirement -- which could last 20 or more years -- it is critical that these individuals begin saving systematically early in their working years," Drinkwater said.

Nearly half of consumers said they aren't planning to contribute to an IRA because they can't afford to, and only a quarter of Americans have worked with a financial professional to plan for retirement, the survey found.

Consumer borrowing surges in November

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Consumer borrowing surged in November by $20.4 billion, the Federal Reserve said Monday. That's the largest monthly gain in a decade.

Consumers took out more loans to buy cars and swiped their credit cards frequently to purchase holiday gifts.

The Fed's category that measures credit card debt rose by $5.6 billion, the most since March 2008. Its gauge that tracks auto loans increased $14.8 billion, nearly matching July's gain that was the biggest since February 2005.

The third straight monthly increase in overall borrowing marks a departure from the more thrifty habits practiced during and immediately after the recession, when credit tumbled and the savings rate climbed. More...http://www.usatoday.com/money/story/2012-01-09/November-consumer-credit-surges/52469942/1

European nations begin seizing private pensions

Hungary, Poland, and three other nations take over citizens' pension money to make up government budget shortfalls.

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings. More...