In my last post I wrote about 3 reasons to save. The first reason is to prepare for rainy days including emergencies or preparing for old age when one cannot work anymore. The second reason is to purchase large items like houses and cars and educations. The third reason is to increase leisure activities like vacations or early retirement. The purpose of this post is to answer the question, "Do Americans save enough?" First, let me define savings. Savings = Income - consumption. If you consume less than you earn, then you have a positive savings rate. If you consume more than you earn then you have a negative savings rate. Negative savings is not categorically bad in every situation. For example, it might make sense for many university students to consume more than they earn by taking advantage of student loans within reasonable limits.
According to some recent studies, Americans say they wish they had saved more for their retirement. According to a survey done by the Consumer Reports magazine's National Research Center, nearly a third of all people at or approaching retirement said their expenses were higher than they had anticipated before retiring. Only 11 percent said expenses were lower than expected. Also, a survey commissioned by Bankrate and administered by the Princeton Survey Research Associates International asked both retirees and workers questions about retirement realities and expectations. They found that 55% of respondents said they wish they saved more.
According to another survey done by Putnam Investments. 70% of people who already retired within the past 2 to 6 years said that they wish they saved more for retirement and 59% said they wish they saved earlier.
So to answer the original question, most Americans say that they wish they saved more and earlier for retirement. Listening to the regrets of the elderly should be a powerful lesson to the young. When you retire, you probably won't be wishing that you saved less.
Coming up: Why don't Americans save more?