It Isn't Me - It's the Economy and My Low Pay
Allstate survey shows Americans say they save well, given their resources
Americans, tired of being told they aren't saving enough for retirement, have a strong message of their own, according to Allstate's fifth annual "Retirement Reality Check" survey. Respondents sent the clear message that they think they're doing just fine, given the resources they have. In addition, survey respondents made it clear that if they are to save more money, they need to be paid more and the economy needs to improve.
The Allstate "Retirement Reality Check" survey measures Americans' attitudes about, and savings for, retirement.
Respondents in the 2005 survey also said they are financially stretched, at least until the kids are out of college, and that they'll worry about saving closer to retirement day. But in the meantime, the majority of respondents insist that they are on top of things.
Specifically, when asked which statements describe them well, respondents said they are disciplined (87 percent overall), educated about investments (71 percent) and good savers (78 percent), according to the Allstate survey. Even 79 percent of those who said they "dread" retirement called themselves disciplined, as did 84 percent of those who are "apprehensive" about retirement.
That discipline extends beyond finances, survey respondents said. For example, the Allstate survey found that 75 percent of respondents said they spend more time solving problems, rather than worrying about them. And 82 percent said they have, and stick to, a budget.
But at the same time, 56 percent of respondents said their savings and investments, not including their home, total less than $100,000. And 53 percent said they have less than $50,000 in accounts earmarked specifically for retirement, such as Individual Retirement Accounts, 401(k) plans, 403(b) savings, as well as taxable accounts.
And despite feeling they are good savers, 64 percent of respondents admit to feeling overwhelmed about how to finance their retirement, and 58 percent say they worry they'll outlive their retirement savings.
"This disconnect between people's attitudes and their actions is a clear reality check," said Casey Sylla, president, Allstate Financial, a business unit of The Allstate Corporation. "Our survey shows that many people view savings as beyond their control, but it is important to take control of our own finances. People cannot afford to leave planning for retirement to external forces."
What triggers Americans to save?
In fact, the 2005 Allstate "Retirement Reality Check" survey shows that external triggers are the most likely to prompt people to save more. Many of the events that might be assumed to trigger savings, such as marriage or birth of a child, were deemed much less significant to survey respondents.
By far the No. 1 savings trigger cited by survey respondents was making more money. Overall, 84 percent said this, and it was the No. 1 savings trigger regardless of age, income, education or gender.
The No. 2 savings trigger was getting closer to retirement, cited by 71 percent of respondents, and No. 3 was having children finish college, cited by 61 percent.
And 60 percent of survey respondents said that the economy needs to improve to allow them to save more.
"It is understandable that many people's first reaction is that they cannot save more unless they make more, because inflation is rising faster than many Americans' paychecks," said Mathew Greenwald, Ph.D., president of Mathew Greenwald & Associates, the Washington, D.C. firm that conducted the survey for Allstate.
The U.S. Labor Department's 2004 National Compensation Survey, released in September, reported that the average hourly wage rose 1.9 percent between July 2003 and July 2004. During that same period, however, inflation rose by 3 percent, meaning the average wage-earner lost actual buying power.
"Clearly some people's pay is increasing faster than inflation, while others are falling behind," Greenwald said. "The key point in the Allstate ‘Retirement Reality Check' survey is that people responded that they can't save more unless they get a raise, even if they're already earning more than $150,000. That suggests that many people are more focused on spending than saving."
Among respondents from households with annual income of $150,000 or more, 78 percent said they would save more if they got a salary increase. That compares with 84 percent of respondents from households with annual incomes of less than $55,000 who said that.
On the other hand, only 41 percent overall said that getting married would prompt them to start saving for retirement, and 29 percent said birth of a child would do that. In both cases, age of respondents was a significant factor
Priorities drive savings strategy
Among Generation X, those born from 1965 to 1978, more than half (55 percent) said marriage would prompt them to start saving for retirement, compared with only 32 percent of Baby Boomers, born from 1946 to 1964. And 39 percent of Gen-Xers cited birth of a child, compared with 20 percent of Baby Boomers.
"It's clear that people are focused on current expenses, which is understandable. It's also logical that having a child increases current expenses for parents. But waiting to save until retirement is on the horizon is unrealistic," Sylla said. "The key is to create a savings plan that addresses your future without shortchanging current needs. That means people have to prioritize needs and goals. The good news is that our survey shows people are emotionally prepared to save."
According to the Allstate survey, most Americans say it "feels good" to save money. More than 90 percent of all respondents said this, regardless of age, gender, income, education or region of the country. And 93 percent overall said it is "important" to save for retirement.
"This again highlights the disconnect between how people feel and how they act," said Greenwald. "It's as if people think it's enough to think about saving, rather than following through with a solid plan. The reality is that we all have to work with the income we have and make the choices that balance our current financial needs with the retirement style we desire."
Allstate created the fifth annual "Retirement Reality Check" survey in conjunction with Mathew Greenwald & Associates. Using a random digit dialing methodology, Greenwald & Associates polled 1,601 people born between 1946 and 1978, with household incomes of $35,000 or more. Retirees were accepted with incomes of at least $20,000. The margin of error (at the 95 percent confidence level) for the total number of respondents in this study is ±2.5 percent, ±3.8 percent for information specific to Gen Xers, ±4.5 percent for Baby Boomers.
Download the mini executive summary (PDF) of the Allstate "Retirement Reality Check" survey.
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Rebecca Hirsch, Media Relations, (847) 402-5600