More than half of American families live from paycheck to paycheck and many have seen their assets erode despite a decade-long economic expansion, the Consumer Federation of America said as it mounted a campaign to get people to form a financial plan and save.
The campaign, called "America Saves," is targeted at people with low and moderate incomes. It will begin in Cleveland next month and in Kansas City, Mo., in April, and the organizers plan to eventually expand it nationwide.
The consumer group released an analysis of Federal Reserve data Tuesday showing that the "typical" U.S. household has net financial assets, including retirement savings, of less than $10,000 and that many families lost wealth in the late 1990s as consumer debt increased.
The median for all U.S. households was $9,850 in net financial assets, or assets minus debts, in 1998, the most recent year covered by the Fed data. Financial assets include savings and investments but exclude a primary home and vehicles.
Among low- and moderate-income households, the median was less than $1,000.
Families Focused on Survival
In a new survey of consumers, commissioned by the Consumer Federation, 53 percent of respondents said they live from paycheck to paycheck sometimes, most of the time or always. The percentage rose to 64 percent for households with moderate incomes of $20,000 to $50,000 a year and to 79 percent for those with low incomes of less than $20,000.
Sixty percent of those surveyed said the phrase "I don't think I'm saving enough for the future" describes them somewhat or very well.
The survey, conducted by Princeton Survey Research Associates, polled a national sample of 1,637 people who make the financial decisions in their households in September and October. The margin of error was plus or minus 3 percentage points.
Stephen Brobeck, executive director of Consumer Federation, described many families as "strapped and struggling" and "focused on daily survival."
"As the economy slows, most Americans will try harder to pay down debt and build wealth but will find both more difficult," he said at a news conference.
New Push for Savings
Brobeck said the new campaign "will try to convince millions of these consumers that they can save and build wealth" by getting people to enroll in savings plans, providing free investment and retirement planning seminars, savings and investment clubs, telephone hot lines and pamphlets. A goal is to enroll 100,000 low- and moderate-income people in savings programs.
In Cleveland, 10 banks and credit unions are offering savings accounts with no fees.
Bank of America Foundation is donating $300,000 to help finance the campaign. The foundation also made a $100,000 grant for the new research released Tuesday by Consumer Federation.
Even though Americans' incomes rose slightly faster than spending in November, the U.S. personal savings rate — savings as a percentage of after-tax income — fell to a negative 0.8 percent, a record monthly low.
A coalition of federal government agencies and financial industry and consumer groups, including Consumer Federation, has been running a nationwide saving and investing campaign since February 1998.
In October, Consumer Federation said Americans are losing $30 billion to $50 billion a year by keeping some $1 trillion in low-interest savings accounts and urged consumers to switch to higher-rate certificates of deposit, U.S. Savings Bonds or special savings accounts that are equally safe.