Broke and barely paying their bills, most Americans have to ignore pleas to save more. No wonder the US savings rate has plunged to historic lows, experts say.
Only about one-third of Americans are living within their means and with their long-term financial future assured, according to Stephen Brobeck, executive director of the Consumer Federation of America (CFA).
The savings crisis cuts across a wide swath of income groups and households — young, middle-aged and seniors. And last week a new CFA survey revealed that the majority are struggling to save.
“I can’t even consider saving,” Shelly Selin, an 80-year-old retiree who lives on Manhattan’s Upper East Side, told The Post. The former HR executive and his wife, who pay a $2,500 monthly mortgage, finance their retirement mostly from investments, annuities and Social Security. That’s before living expenses, including food and electricity, are factored in.
As a volunteer tax preparer with an active social life, Selin is alarmed at talk of saving. “Bank interest rates are at less than 1 percent, and I’ve heard stories of people saying, ‘I thought I had enough money in CDs, and now I don’t.’ They forget these CDs don’t pay any interest.”
These struggling savers are not alone. The United Way of Northern New Jersey charity has coined a new term, ALICE, for the vast population of low- and moderate-income households that are now sometimes a paycheck away from financial disaster.
For ALICE (Asset-Limited, Income-Constrained, Employed consumers), saving is often the last thing on their minds.
“They are barely getting by,” said Laura Bruno of the United Way of Northern New Jersey. “They are not able to put any more aside for savings, so if they have one emergency — [for example, if] the car breaks down — they can find themselves in real trouble.”
Despite today’s bank come-ons for new savers — $200 cash bonuses are one recent incentive — hard-core savers are scarce.
As shoppers rushed to the mall this past Christmas, the savings rate (the percentage of disposable income households are putting aside) declined to an 11-month low of 3.9 percent.
Analysts are not surprised. “The American government strongly believes that people should spend as much money as they get,” said bank analyst Dick Bove of Rafferty Capital Markets.