Bankrate.com just released its monthly financial security index findings. Last month there was a significant drop in sentiment among Americans polled, but now Americans are feeling a little better. The FSI is at 99; up from 97.9 last month. Joining us is Greg McBride, Senior Financial Analyst at Bankrate.com. Greg, what caused the move upward and what does that 99 reading mean?
Greg: We saw an increase in readings on all 5 components of financial security – job security, savings, debt, net worth, and overall financial situation. Despite that increase, it was not enough to tip the Financial Security Index back into positive territory. A reading above 100 indicates financial security has improved compared to one year ago and any reading below 100 indicates that financial security is lower. At this month's reading of 99, financial security is just a touch lower than one year ago.
This month's poll also asked Americans about their retirement savings? How are we doing on that front, Greg?
Greg: The good news is that fewer people are saving less, just 18 percent compared to 29 percent last year. A little more than half – 55 percent – are saving the same as last year, while just 18 percent are saving more. For a nation of chronically undersaved, we really need a higher percentage of working Americans to be increasing their retirement savings.
So for American's who would like to improve that retirement score next year, what kind of advice can you give?
Greg: If you're not saving at least 10 percent of your income for retirement, you need to get to that level pronto! And if you are saving 10 percent, or once you get to that point, work on increasing it to 15 percent. With the burden increasingly on us as individuals to save for our own retirement, saving 15 percent of your income is the new bogey.
Great advice! Thanks so much, Greg. And of course, if you'd like to see all the findings of this month's survey, or find ways to increase your retirement savings, just log on to our website, Bankrate.com. I'm Lucas Wysocki.