High Debt and Bill Payments Hold Down Saving and InvestmentWhile nearly half of U.S. investors were positive overall about their financial futures, the other half of those surveyed expressed worries ranging from "concerned" to “nervous,” “pessimistic” and even “depressed.” Notably, 58% of people who worked with a financial advisor—whether affluent or not—reported feeling positive about their financial future. Affluent investors were more upbeat, with 72% describing themselves as positive, 78% saying they felt in control of their financial futures, and 81% saying they were confident that they were making the right savings and investment decisions. Debt and bill payments appear to be contributing to the concerns of average Americans and having a significant effect on the way they save and invest. The percentage of take-home pay devoted to living costs bills and debt is particularly high in the U.S. (49%) compared to the global average (40%). These costs translate into widespread personal savings deficits in the U.S. Americans reported saving, on average, just 16% of their take-home pay each month – compared with the global average of 18%. And when asked what would encourage them to invest more of their cash savings, nearly one in three (32%) respondents indicated “less personal debt.” When individuals pinpoint key risks to their financial future, the lingering fallout of the credit crisis and associated economic downturn is evident. In the U.S., “healthcare costs" followed by “job security” and “state of the U.S. economy” topped the list as respondents’ number one concerns, and “having to spend more than I earn” was mentioned most often among global respondents’ top three concerns (31%). However, 43% of U.S. respondents said a modest earnings increase of $200 per month would encourage them to save more generally; 40% reported that they would pay off more debt, and 26% resolved they would save more for retirement specifically . The Wisdom of Elders Around the world and in the U.S., respondents say they have recently spent more time planning a vacation (35%/27%), the purchase of a new technology item such as a smartphone (25%/25%) and researching a car purchase (23%/26%) than they have devoted to reviewing their retirement plan (17%/20%).
Retirees responding to the survey would advise very different behavior on the part of their younger peers. When asked with the benefit of hindsight if there is anything they would have done differently, retirees responded as follows:
- I would have started investing for retirement earlier (36%)
- I would have spent less money (32%)
- I would not have changed anything (23%)
- I would have worked for longer (21%)
- I would have sought professional financial advice (12%)