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Americans Save Less

Despite improved economic times and a growing unease over the future of Social Security, nearly half of all Americans (46%) have less than $10,000 saved for their retirement, according to Miles To Go: A Status Report on Americans’ Plans for Retirement, a new public opinion study released today by Public Agenda. In fact, three in ten of those closest to retirement – “pre-retirees” between the ages of 51 and 61 – as well as four in ten “baby boomers” (those between the ages of 33 and 50), say they have saved less than $10,000. And 39 percent of Americans are anxious about their ability to achieve their desired retirement lifestyle, up from 29 percent in a 1994 Public Agenda study.

“Understanding attitudes and behaviors about saving is a key factor in preparing Americans for retirement, which is one of the reasons why Fidelity asked Public Agenda to conduct the study,” said Paul J. Hondros, president of Fidelity Investments Retail Group. “Miles to Go identifies key trends, including evolving opinions about Social Security, which affect the population’s preparedness for meeting their financial goals and achieving sufficient retirement savings. The research also provides clear direction on how Americans can be motivated to save and better prepare for their retirement years.”

An increasing number of Americans also have doubts about the future of Social Security. Today, one-third of Americans, versus one-quarter in 1994, do not expect to receive any Social Security benefits. But the majority do not feel Social Security’s funding problems are a result of the aging of the nation’s population. Rather, 62 percent of Americans point to waste and mismanagement in the program as the root cause.

“The ongoing political debate in Washington over Social Security’s future appears to have confused and alienated the public, rather than motivated them to save,” said Deborah Wadsworth, Executive Director of Public Agenda. “With Americans believing leadership, not a demographic shift, is responsible for Social Security’s difficulties, the ability to garner the public’s support for broad-based changes experts say are essential may prove to be formidable,” added Wadsworth.

The heightened anxiety over Social Security, however, is not prompting people to save more. Two in three Americans (68 percent) say they could save more if they made the effort to do so, although one-third feel they cannot save due to a lack of discretionary income. But, when the 68 percent were asked about specific ways in which they could cut back in order to save more for retirement, such as dining out less frequently or shopping more carefully for groceries or spending less on clothing, fewer than 2 in 10 said they would be very likely to do so. And many are acquiring credit card debt to finance this purchasing. Nearly half (47 percent) of credit card holders carry finance charges every month on their balances, and almost half of all Americans report receiving a credit card application every week.

“The virtue of saving appears to have escaped most Americans, although the `just charge it’ mentality is thriving. Our access to consumer goods is considered an American success story, but could we have gone too far? The ethic of consumption is driving many Americans to leverage their futures by relying on credit, and many may face bitter disappointment and anxiety over the quality of their retirement years,” added Wadsworth.

Miles to Go is based on a national telephone survey of 1,200 randomly selected members of the general public. Conducted in January and February of 1997, the survey was restricted to non- retired individuals aged 22 to 61. The margin of error is plus or minus 3 percent. In addition, Public Agenda conducted 20 in-depth, follow-up telephone interviews with survey respondents.

Saving Not On The Public’s Radar Screen

“Only 37 percent of Americans say they think about retirement often, and only 2 percent identify retirement as their most pressing problem. “Two-thirds of baby boomers say they don’t want to worry so much about saving for their retirement that they don’t enjoy their lives now. Baby boomers are not alone: 7 in 10 young adults between the ages of 22 and 32 years old, and 7 in 10 pre-retirees between 51 and 61, say the exact same thing. “Seventy-six percent of the general public feels they should be putting aside more money for their retirement. “Thirty-five percent of Americans say the economy would improve if consumers cut back spending and saved more; 35 percent say the economy would get weaker; 24 percent say it would not make much difference.

On Social Security

“Eight in ten Americans (84 percent) believe “the government is mismanaging Social Security so badly that money is going to waste.” “Compared to what retired people receive today, 20 percent think their benefits will be the same or better; 45 percent think they’ll be worse; and 32 percent expect to receive no benefits at all. “Eighty-one percent think the very people who need Social Security the most might drop out and get themselves into trouble if we make Social Security participation voluntary. But 41 percent favor voluntary participation, perhaps because of rising doubts about Social Security’s viability. “Ninety-three percent of the public thinks people who are now retired were promised Social Security benefits when they were working and we should keep that promise.

On Incentives to Save

“Seventy-seven percent of Americans prefer to save for retirement through automatic deductions from their paychecks; only 19 percent prefer to make a savings decision each time they are paid. “Six in ten members of the public say their workplace offers a savings or IRA account direct deposit option; of those, 77 percent say they take advantage of this opportunity. “Sixty percent say it is better to keep, rather than loosen, legal restrictions on retirement plans. Only 36 percent feel it should be easier for people to have access to their savings before retirement.

On Personality and Saving

“Twenty-six percent of Americans are “planners” who are three times more likely than the rest of the population to say they have good saving habits and are the least likely to have credit card debt. “Twenty-one percent are “strugglers” who are about three times more likely to say that whenever they start getting their finances in order, unpredictable expenses set them back. “Twenty percent are “deniers” who are almost three times more likely to say they don’t want to worry so much about saving for tomorrow that they don’t enjoy today. “Thirteen percent are “impulsives” who are more likely than others to say shopping makes them feel good and to face monthly credit card finance charges. “(These personality types were first identified in Promises to Keep, Public Agenda’s 1994 study.)

Miles to Go was made possible by a grant from Fidelity Investments. It is a follow-up to a 1994 Public Agenda study also funded by Fidelity, Promises to Keep: How Leaders and the Public Respond to Savings and Retirement. The principal researcher and author of both studies was Steve Farkas, Public Agenda’s Vice President and Director of Research. For information on how to obtain a copy of Miles to Go, contact Public Agenda by phone (212/686-6610), fax (212/889-3461) or E-mail ([email protected]). To help the public grapple with the complex issues of Social Security and Medicare, Public Agenda prepared a citizen discussion guide, The National Piggybank: Does Our Retirement System Need Fixing? To order The National Piggybank, contact Kendall/Hunt Publishing (800/228-0810).

Public Agenda is a nonpartisan, nonprofit public opinion research and education organization working to help citizens better understand complex policy issues and to help the nation’s leaders better understand the public’s point of view. It was founded in 1975 by Daniel Yankelovich and Cyrus Vance.

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