Many Americans Lack Savings

Twenty-seven percent of Americans have no personal savings and 34% have no retirement savings, according to results of a new Harris Poll. Just 18 months ago those numbers were moderately lower, at 22% and 30%, respectively.

Echo Boomers, Gen X Least Likely to Save Personally

When it comes to personal savings, the age group least likely to have any is Echo Boomers (18-33), with 33% having no personal savings. Gen X fares little better with 32% having no personal savings. Only 14% of Matures (65 and older) lack personal savings.

Overall, bank savings and CDs are the most popular form of personal savings (31% of respondents have most of their personal savings in these mechanisms, down close to 10% from 34% in May 2009). Interestingly, the two most likely age groups to mostly use bank savings and CDs are Echo Boomers (41%) and Matures (31%).

Few Change Personal Savings

Seventy percent of Americans say they have not changed their personal savings in the past six months, up more than 10% from 62% in May 2009. Only a combined 15% have moved money out of a savings vehicle.

Looking at respondents with differing educational levels, those with a high school degree or less or some college (74% and 75%, respectively) are more likely to have not changed their personal savings in the past six months than those with a college degree or post-graduate education (60% and 61%, respectively).

More than Half of Echo Boomers Have No Retirement Savings

Echo Boomers’ retirement saving habits are even worse than their personal saving habits. Fifty-three percent of Echo Boomers have no retirement savings, with Gen X the next most likely to say this at a far lower 32% response rate.

The most popular form of retirement savings overall is a relatively equal mix of stocks/mutual funds and investments such as bonds and money market funds (22%, not much different from 19% in May 2009). Echo Boomers (16%) and Gen X (27%) were both more likely to mostly put their retirement savings in stocks and/or mutual funds, however.

Retirement Savings Largely Untouched

Retirement savings, like personal savings, have mostly not been changed in the past six months. Seventy-four percent of Americans have not done so, up about 14% from 65% in May 2009. Also similar to personal savings, lower educational levels are associated with a lower likelihood of having changed retirement savings in the recent past.

Average Young Worker on Track to Save 2/3 of Needed Money

Due to lack of participation in defined contribution plans, low savings rates and high rates of cashouts, Aon Hewitt analysis indicates eight in 10 Generation Y workers (ages 18-30) will not meet all of their financial needs in retirement unless they significantly improve their saving and investing behaviors.

After factoring in inflation and post-retirement medical costs, Aon Hewitt projects Generation Y workers will need to save 18.7 times their final pay in retirement resources: including Social Security, employer-provided defined benefit and defined contribution plans and employee savings; to maintain their current standard of living in retirement (this assumes retiring at age 65; more will be needed to retire earlier).

Yet Aon Hewitt’s research shows that employees of this generation who work a full career are on track to accumulate just 12.4 times their final pay, leaving a shortfall of 6.3 times pay, a third of their total needs.