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Savings plans have benefits

By Marcie Geffner · Bankrate.com
Thursday, February 23, 2012
Posted: 4 pm ET

A new survey has found that more people are having difficulty saving to meet important financial goals such as responding to an emergency and being able to afford a comfortable retirement.

The survey of 1,007 people was commissioned by the Consumer Federation of America, or CFA, American Savings Education Council and Employee Benefit Research Institute. The survey was conducted in early February by Opinion Research Corp.

Sixty-six percent of respondents said they spent less than their income and saved the difference and had sufficient emergency saving to pay for unexpected expenses. But only 42 percent said they had a savings plan with specific goals, and only 52 percent of those who weren't already retired said they were saving enough for a retirement in which they'd have a "desirable standard of living."

Having a savings plan with specific goals can have beneficial financial effects, the survey also found. Even when income was taken into account, those who had a plan were much more likely to spend less than they earned and save the difference, have adequate emergency savings and among the nonretired, say they were saving enough for retirement.

Other findings:

  • Sixty-five percent of respondents ages 35 to 44 said they had a savings plan, the highest proportion of any age group. Sixty percent of this population also believed they were saving enough for retirement.
  • Respondents whose income was less than $25,000, representing about one-quarter of all households, were least likely to have a savings plan, spend less than their income and save the difference, have sufficient emergency savings and believe they were saving enough for retirement.
  • On the flip side, respondents whose income was more than $100,000 were most likely to save at least 10 percent of their income and believe they were saving enough for retirement.

CFA executive director Stephen Brobeck noted in a statement about the survey that the recession clearly has not ended for millions of families, especially those with lower incomes.

Follow me on Twitter: @marciegeff

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1 Comment
Tom Kosanda
February 27, 2012 at 6:42 pm

The rates banks pay for funds is low.

According to Bankers Benefits the national average Cost of Funds is just .75% less than one percent