Tags: SaveUp | savings | consumer | Bankrate

Report: Consumers Are Saving Less Again

By    |   Friday, 13 September 2013 08:30 AM

Consumers appear back to their spendthrift ways just a few years after the financial crisis exposed their irresponsible savings habits, according to SaveUp's U.S. Consumer Savings and Debt Report.

That could be a troubling sign.

"While increased consumer spending is a sign of financial recovery, if Americans focus their spending on credit cards while reducing short-term and emergency savings, we may re-enter the pattern of overleveraged spending that led to 2008's unstable economy," says Priya Haji, CEO of SaveUp, a national online financial rewards program for saving and paying down debt.

Editor’s Note:
Obama’s Budget Takes Aim at Retired Americans

The savings rate was just 3.8 percent in August 2008. From there, it increased, going as high as 8.7 percent in December 2012, according to Commerce Department data cited by CNBC.

But with the financial crisis and recession evidently fading from memories, Americans began saving less.

Since December of last year, savings rates have declined to near pre-recession rates, below 5 percent, SaveUp notes. As of July, it stood at 4.4 percent.

The average consumer's invested assets increased $369.64 in July, mostly due to the rising stock market, according to SaveUp. But instead of saving the extra money, consumers increased credit card spending by an average of $68 month over month and cut cash contributions to short-term savings by about $52 in July.

"We need to encourage a recovery where consumer spending and investments increase in tandem without incurring additional short term debt. This relies on increasing real wages," Haji explains. "We don't want to see Americans regain spending at the sacrifice of longer-term financial security."

A new Bankrate survey also underscores Americans' low savings rate.

Only 18 percent of working Americans are saving more for retirement now than they were one year ago, according to the survey. Seventeen percent are saving less and 54 percent are saving about the same amount.

Employed Americans between the ages of 50 and 64 are the most likely of all age brackets to be saving less this year.

"This is troubling considering the availability of catch-up contributions for those 50 and up, as well as the higher 2013 contribution limits for all eligible IRA and 401(k) contributors," states Greg McBride, Bankrate's senior financial analyst.

Bankrate's Financial Security Index, which measures consumers' job security, net worth, debt, savings and overall financial situation, was down for a second straight month but was still better than a year ago.

Americans feel insecure about how much they're saving. Those saying they're less comfortable about their savings outnumbered those who are more comfortable by a margin of nearly two-to-one. Consumers have voiced negative sentiment on savings every month since polling began in December 2010.

Editor’s Note: Obama’s Budget Takes Aim at Retired Americans

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Consumers appear back to their spendthrift ways just a few years after the financial crisis exposed their irresponsible savings habits, according to SaveUp's U.S. Consumer Savings and Debt Report.
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