The average adult has less than $10,000 saved, saves less than 10% of his or her salary for retirement, feels financially insecure and would spend almost half of any newfound money, according to a slew of new data from Pentagon Federal Credit Union and market research firm McLaughlin & Associates.
Tysons Corner, Virginia-based PenFed and McLaughlin & Associates collected the data in a survey of 1,000 adults in February. They released the data over the course of America and Military Saves Week last week. PenFed has $23 billion in assets and about 1.6 million members.
“The [America and Military Saves] Week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status,” the credit union said.
|Most Americans have little saved
The survey found that on average, adults had $8,700 saved. That included households with dual incomes. Most adults (62%) had less than $5,000 saved; only 20% had more than $20,000 saved.
On average, adults put 7.6% of their salary into retirement savings. Almost one in five (18%) never save money, according to the study.
|The demographics of saving
Income and education appeared to be factors in how much money people save.
- Households with incomes under $40,000 had just $3,100 saved on average, compared to $12,200 for households over $40,000. Households with incomes over $100,000 saved at a rate nearly twice that of lower-income households.
- College graduates saved at a higher rate and had more than double the savings that adults without a college degree had ($13,300 compared to $5,200).
- Men tended to save a higher percentage of their salaries for retirement (8.9% versus 6.4% for women).
Optimism about saving and the future
Feelings of financial insecurity are rife, according to the data, but 59% believe their financial futures are bright.
- About half of adults planned to save more this year than last year, according to the study, and 30% plan to save the same amount. Only 10% expected to save less than last year.
- A whopping 84% of adults without a college education said they felt financially vulnerable, compared to 69% of college graduates.
- Younger adults felt more secure than adults over 44 did (26% versus 19%), and women felt more financially vulnerable than men (82% versus 72%).
People who had personal financial advisors felt the most secure, and people who had automatic savings plans felt more financially confident than people who just used a banking app or no banking technology.
|Savings boosters: automation and advisors
According to PenFed's findings, people who automate their savings had bigger nest eggs and allocated more of their income to retirement savings. Men and young adults were more likely than women and older adults to automate their savings.
“Adults with automatic savings on average have $3,000 more in savings compared to adults who only use banking apps and $4,000 more than adults who use neither technology,” the study reported. “Four in five (80%) adults who have automatic savings are monthly savers, which is significantly higher than adults who use a banking app (52% monthly) and adults who do not use either technology (31%).”
Adults who had financial advisors also saved twice as much (10.4% versus 5.5% of people without advisors).
|Windfalls are often (but not always) saved
“American consumers are overall more likely to be fiscally responsible with newfound money, rather than spend it on entertainment or social activities. Saving is in the forefront of adults' minds when it comes to handling new found money across all key demographics. If adults were given $5,000, they would put about half of it (48%) into savings, spend 42% and give 10% to charity,” PenFed found.
Paying bills and paying down debt was a higher priority for households with less than $60,000 in annual income.
“By education level, adults without a college degree are more likely to pay bills (61% to 48%) while college graduates are more likely to save for retirement (29% to 18%),” the study added.
However, the survey also found that 19% of adults would treat themselves to a vacation and 14% would buy a car. Few (14%) said they would save the money for education or college. Adults under 54 were more likely to go on a shopping spree or a big night out with the money, according to the survey.
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