“Americans appear more relaxed about retirement and are far less worried about their finances overall,” said Craig Hogan, Scottrade’s director of customer intelligence. “The number of people who reported being concerned about issues such as day-to-day expenses, education costs, paying off credit cards, and saving for big ticket purchases didn’t just decline – each category hit a four-year low.”
Overall, fewer people reported taking cost-cutting measures in 2010 compared to 2009. The number of Americans who combated the economic crisis by spending less last year was high – 75 percent. This year, 67 percent of people surveyed plan to spend less, indicating that fewer people are continuing to tighten their belts. The list below highlights the actions that dropped most significantly since last year.
“As financial concerns ease, so does the focus on the budget,” Hogan said. “The number of Americans who are paying down debts and cutting back on credit card usage is at a four-year low. And while those who reported that they are saving more dropped only slightly since last year, that number also is the lowest it has been since 2007.” (45 percent in 2007 vs. 33 percent in 2010)
Focus on Retirement Planning and Saving Declines
Americans are not only less proactive about tightening their belts, they also are less focused on retirement planning and saving.
More than a quarter (27 percent) never think about retirement – the highest amount in four years and a seven percentage point jump from last year. Further, 40 percent of Americans are not actively planning for retirement (up from 35 percent in 2009), a number that also is at a four-year high (up from 27 percent in 2007).
Forty-one percent of Americans have saved $25,000 or less for retirement. Further, an alarming 41 percent saved nothing for retirement in 2009, up from 33 percent who said they saved nothing in 2008. And the number who plan to save nothing in 2010 spiked to one-third.
“This return to the type of financial apathy seen before the economic upheaval has happened surprisingly fast,” Hogan said. “Some investors may simply be burned out a bit by the intense and prolonged focus on their finances last year. However, that financial focus also seems to have created a much larger number of Americans who have confidence in their own ability to plan for retirement. Almost 70 percent rate their planning abilities as ‘good’ or ‘very good,’ up from 52 percent last year. Ideally, these newly confident investors will take advantage of what they learned during the crisis to better plan for the future.”
Faith in the Market Remains Steady
The market upheaval was the source of many financial changes, but it did not result in drastic changes to the retirement savings vehicles Americans chose. Most Americans (78 percent) took the long view and kept their retirement savings in the market. Of the 22 percent of investors who did get out of the market, more than half of them plan to move some or all of the amount back.
Many investors who opted to stay in the market found that the decision served them well. Sixty-six percent of survey respondents reported that the value of their retirement accounts stayed the same or increased in 2009. Of those who saw declines, nearly two-thirds (62 percent) expect they will recover within five years, and 43 percent trust that their accounts will rebound with the market and are not planning to save more to rebuild their personal nest eggs.
“The survey results show that Americans feel that the market is the best place to grow their retirement savings,” Hogan said. “Scottrade is here to help every step of the way, with information and resources that make it easy and convenient for investors to build the best retirement strategy to fit their needs.”
