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Survey: Americans Squeezed on Saving Money Even While Hoping for Retirement at 60

February 28, 2019

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There is some work to do — financially speaking — to close the gap between expectations and reality.

A new survey from Varo/Qualtrics showed that many Americans hope to retire between 50 and 60 years old but don’t have enough to cover an emergency bill tomorrow let alone the savings plan they’ll need to get them there.

Six in 10 Millennials Don’t Have $500 Saved

Overall, the results showed that people in all age groups are squeezed when it comes to saving.

Six in 10 (61%) millennials don’t have $500 to cover an emergency expense; that percentage is even higher for millennial women, 65% of whom don’t have that amount. Across all age groups, 55% of respondents said they did not have $500 in cash for an emergency.

Key takeaways:

  • 55% of people across all ages don’t have $500 in ready cash for an emergency

    • 61% of millennials and 65% of millennial women don’t have that amount

    • Men are far more likely than women to have an emergency fund of at least $500 easily accessible cash (56% of men vs. 39% of women).

    • Boomers are most likely to have $500 in emergency cash (63% do) but almost a quarter (26%) of them don’t have any savings at all, be it in a savings account, 401(k), etc.

    • 43% of all people who don’t have access to $500 also do not have health insurance.

  • 49% save less than 5% of their income; half of those people (25%) save nothing at all

Nearly half of all respondents (49%) said they saved less than 5% of their income, and a quarter (24%) said they are saving nothing at all. However, a small group of respondents (4%) were super-savers, putting away at least 25% of their income.

A national trend

Survey respondents underscore the broader trend in the United States.

The national saving rate is around 6%, according to data kept by the Federal Reserve. This marks a substantial dip from the 1970s when Americans had a personal savings rate well over 10% on average. Financial experts recommend that people save at least 10-15% of their income across cash and retirement savings goals.

Read more: How Much Cash Should I Save Each Month?

There are many factors behind the savings crunch — economists have pointed to broader macro trends over the decades in the United States such as higher costs of living, wage stagnation, and rising student loan debt, to name a few.

Other factors are more recent, including things like social media. A Varo 2018 survey showed that people are more likely to spend money after looking at social media in order to feel better about themselves.

Savings accounts: a missing link?

  • 45% of people don’t have a savings account

  • People are more likely to save money in cash or checking than a savings account

[caption id="attachment_6501" align="alignleft" width="450"]where people keep money Check out Varo Instagram for savings tips.[/caption]

Almost half of the respondents (45%) reported that they do not have a savings account.

Among those who do have a savings account, nearly one-third (30%) said they did not know the Annual Percentage Yield (APY) for that account. Of those who did know their APY, the majority (56%) said they are getting less than 1.00% APY. The national average APY on a savings account is 0.09%, according to the FDIC.

In January 2019, Varo announced one of the highest Annual Percentage Yield savings accounts in the country, underscoring the company’s social mission to help people improve their overall financial health.

“Saving money is a key to long-term financial health,” Colin Walsh, Varo CEO, said. “That’s why we offer one of the highest Annual Percentage Yields (APY) for a savings account in America. We want saving money to be as easy as possible and earn you real return on interest.”

Expectations vs. reality

Key takeaway:

  • Americans plan to retire by 60 and live into their 80s on little to no savings

One in five (23%) of millennials currently receives monthly financial assistance from relatives, more than half (58%) don’t have a comprehensive financial plan, but the cold, hard reality isn’t crimping people’s dreams of retirement, the survey showed.

Most respondents under 60 (59%) said they plan to retire by 60, and many said they expect to live into their 80s (37%) with another 20% believing they’ll live into their 90s.

More than one-third (35%) of millennials without $500 in emergency cash still say they plan to retire by 60, and despite their current dismal situation, nearly a third of millennials assume they’ll be living on $100,000 a year when they do retire.

One in 5 (22%) of people who said they have no money saved still thinks they could retire by age 50 or younger.  Just one-third of people (35%) of those with no savings have a goal number in mind as the amount of money they’ll need to earn in order to retire at their target age.

Only 40% of respondents have access to a retirement savings plan through their employer, and of those with access, 81% participate in it.

Gen X and Millennials are most pessimistic, thinking they’ll never be able to retire (19% and 16%).

Four in 10 (41%) of respondents feel that enjoying themselves every day is most important when it comes to money, followed by 35% who think saving for periodic big events or purchases like a vacation is most important. Less than a quarter (24%) think saving for retirement is most important.

The good news?

Key takeaway:

  • You don’t have to be rich to be happy: the majority of people (70%) think they can be happy living on less than $100,000 year

Even as saving money is a struggle, many people say they don’t need (too) much to feel happy or rich.

The majority of people (70%) think they can be happy on less than $100,000 year. And almost a third (31%) of respondents indicate they only need to make $25,000-$49,000 in annual income to be happy.  What’s rich, then? More than a quarter of respondents (28%) defined earning $100,000 to $249,000 per year as “rich.”

Most respondents feel they are NOT financially better off than their parents were at their same age (56%). But they also feel that their life and career options are better than their parents were (61%). Respondents are split on whether or not they are happier than their parents were at the same age (50%). Gen Xers are the most positive in this regard (55%).

Tech is making it easier

Tech is already helping. Four out of 10 people say they haven’t even set foot in a bank in the last six months (and the top reason to do so is to deposit a check, according to 60% of respondents.) Meanwhile, the majority of people (69%) say tech has made it easier or the same to manage their finances.

But when it comes to saving money only half of the respondents (47%) think that technology has made it easier.

Walsh commented, “We absolutely believe technology can help people save. At Varo, 75% of our customers use technology — like automated savings tools — to help them save on a regular basis.”


The survey of 1,200 U.S. consumers between the ages of 18 and 75 was conducted by Qualtrics on behalf of Varo during December 2018.

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