What would you do if someone handed you $5,000?
Put it into savings? That’s admirable, and you would be among the majority. Pay bills? You’re not alone. Over half of people would do the same. Save for retirement? That’s a different story.
In a recent survey on consumer behaviors and opinions related to savings, 63 percent of respondents said they would save it. Around 55 percent indicated they would pay bills. Just 23 percent would put the money toward retirement.
On average, adults are directing 7.6 percent of their salary to retirement savings. The nationwide survey, funded by PenFed Credit Union, found that this “percentage increases among households with incomes over $100,000, college graduates, men, adults with a financial advisor and adults who have automatic savings.”
The study was conducted online by McLaughlin & Associates and examined a cross-section of 1,000 adults ages 18 and older.
More specifically, data revealed:
- Households earning $100,000 or more are putting away almost twice as much for retirement than their lower-income counterparts (11.7 percent to 6.2 percent).
- Those with a college degree save 9.3 percent of their salary on average, compared to 6.2 percent among those without a degree.
- Males tend to allocate a higher percentage of income to retirement than females—8.9 percent versus 6.4 percent. (Not good when considering research that found women often need more money to retire than men.)
- Adults with a financial advisor save at a rate nearly two times the amount of adults without an advisor (10.4 percent to 5.5 percent).
- And finally, those with automatic savings (or a banking app on their mobile device) are directing more than twice as high a percentage of income toward retirement savings—10.2 percent compared to 4.8 percent—than those who do not have auto-savings.
“It’s hard to think about retirement when it seems so far away. But if you start saving a small amount today, it will add up for the future,” said Stephen Simpson, CFP, AAMS, Vice President, Affiliated Businesses with PenFed.