Dear Santa: How About a Little Something for My Retirement Fund?
November 25, 2009
'Tis the season... for savings?
According to an new poll conducted by MoneyRates.com and GetRichSlowly.org, savings are exactly what is on people's minds as they make their lists and check them twice. Poll respondents were asked, "Secretly, what would you really like most as a holiday gift?" Their voting choices were:
- An iPhone or iTouch
- An HD television
- A stunning piece of jewelry
- A contribution to get your retirement savings back on track
By an overwhelming margin, the contribution to retirement savings was the top choice.
Poll Results and Savings Context
Nearly half, or 46%, of poll respondents chose the contribution to retirement savings. The iPhone/iTouch and HD television options each drew 22% of responses, while jewelry was the choice of only 11% of the poll respondents. (The numbers don't quite equal 100% because of rounding.)
A contribution to retirement saving may seem a surprising choice. After all, no one is talking about retirement contributions as this year's hot holiday gift. Still, it's a choice that makes sense.
Given the recession, bear market, and low bank rates, many families have seen their retirement funds struggle over the past couple of years. As much as the stock market has recovered in recent months, the S&P 500 is still about 30% off its peak. Even before that market decline, retirement savings rates were not what they needed to be for many Americans. The Employee Benefit Research Institute reported that the average balance of 401(k)s and similar retirement savings accounts held with Fidelity Investments stood at $69,200 at the start of 2008--a long way from an adequate retirement nest egg.
These new poll results suggest that more and more people are looking to their future retirement and realizing they have some catching up to do. Instant gratification is finally taking a back seat to planning ahead--for some people, at least.
What This Means for Savings Rates
Does this poll result mean that savings rates will start to rise across the US? Perhaps not universally. After all, MoneyRates and GetRichSlowly are both Web sites dedicated to financial education, so this poll had a somewhat selective audience of people who take their financial responsibilities seriously enough to stay informed on the subject. And, while a contribution to retirement savings was the leading vote-getter, it still attracted less than 50% of the responses. More than half the audience want their holiday gifts to address the here and now rather than the future.
In short, there is still work to be done before the majority of people realize that it will take a greater effort to get savings rates on track to finance their retirement needs. Still, these poll results are encouraging. It's fair to say that at the start of this decade, few people would have given retirement needs a second thought when it came to dream holiday gifts. A decade of poor stock market results and the longest recession since the 1930s seem to have awakened a greater sense of financial responsibility.
Of course, it would take a pretty special relationship in order to be able to actually ask someone for a retirement contribution as a holiday gift. Still, if these wish list priorities spill over into people's consumption habits, we should start to see more Americans getting their savings rates back on track.
Source:
S&P 500 Index, Historical Prices (1950-2009) • Yahoo! Finance: http://finance.yahoo.com/q/hp?s=%5EGSPC&a=0&b=3&c=1950&d=10&e=25&f=2009&g=d&z=66&y=528
Jack VanDerhei • The Impact of the Recent Financial Crisis on 401(k) Account Balances • Feb 25, 2009 • Employee Benefit Research Institute: http://www.ebri.org/pdf/briefspdf/EBRI_IB_2-2009_Crisis-Impct.pdf
