Even though unemployment is down and wage growth is up, statistical measures tracking the saving behavior of Americans show that people’s ability to save money hasn’t improved much. A 2018 survey conducted by Bankrate found that 19% of Americans report not saving anything whatsoever, and another 21% save less than 5% of their income.
These numbers are alarming because if you want to retire comfortably, financial planners advise saving at least 15% of your income consistently for several decades (depending on how long you expect to live). In the Bankrate survey, only 16% of participants reported saving more than 15%.
The news is discouraging but not surprising. The results are just the latest in a decade-long trend of insufficient saving by Americans. As I have written before, saving money is difficult, while spending in an undisciplined way is gratifying. Many people set lofty goals to save money, say for a wedding or a down-payment on a house, fail to reach them, then feel dispirited and give up. Saving money regularly by making it part of your lifestyle is far more effective.
