Are you saving enough? There's about a 50% chance that the answer is no, according to a recent survey.
This lack of savings has left a substantial number of Americans in economic peril, either because they've failed to save adequately for retirement or because they don't have enough socked away to handle short-term emergencies. A single unplanned expense, such as a doctor's bill or a car repair, could send such people toppling into the arms of predatory lenders or bankruptcy.
Most of these substandard savers "are conscientious, hardworking people who are trying to do the right thing," said Stephen Brobeck, executive director of the Consumer Federation of America. "But they are at financial risk and they could be doing more to reduce that risk."
To mark its second annual America Saves Week, a coalition of 1,000 companies and other organizations last week publicized tips on how to save more. The reason these groups care: People are better consumers, better citizens -- even better soldiers -- when they're economically stable.
"We equate financial readiness with military readiness," said Cmdr. David Julian, deputy director of a Defense Department division that is focused on families and is part of the America Saves coalition.
Even a small savings account -- holding $500, or $1,000 -- could forestall disaster and serve as a linchpin to building lasting wealth, experts say. But that wouldn't cover a typical unexpected expense costing $2,000.
Why don't people save more?
The most common reason people give is poverty, but that's usually just an excuse, not the reality, Brobeck said. Although some people who have recently lost a job or gone through a divorce may be temporarily unable to save, a decade of research has found that the vast majority of Americans can save at least small amounts if they are willing to address their spending.
Too often, however, people don't think about where their paychecks go, so they fritter away money on rented videos, fast-food lunches, lattes and other small indulgences without ever stopping to think about the accumulated cost.
Consider: A $5 daily McDonald's or Starbucks habit costs $150 a month. Over 10 years, that $5 a day adds up to the cost of a car -- $29,086, to be precise. That assumes you would have saved the $5 a day and earned an average of 10% on your money over time. (This is the average annual return of big-company stocks, according to Ibbotson Associates, a Chicago-based research firm.)
