Average Amount Put Away for Retirement Declines

July 22, 2011 (PLANSPONSOR.com) - Continuing economic turmoil sent the First Command Financial Behaviors Index tumbling six points during the second quarter, reflecting a steady erosion in the financial intentions and attitudes of middle-class Americans.

After hitting a two-year high of 101 in December 2010, the Index has been declining over the first half of 2011 – with a substantial drop from 90 in April to 86 in May. This four-point drop was the product of a substantial decline in the behaviors sub-index, which was driven largely by a decrease of nearly $350 in the average amount Americans put into retirement accounts (from $940 in April to $598 in May).   

According to a press release, consumers are using loans and their savings as a way to pay for amenities during the continuing economic turmoil. Just under half of consumers report taking out at least one loan in the last year, and one third report taking out at least one loan in the last six months.  

Furthermore, results indicate that 92% of Americans have at least some sort of debt built up – proven further by the record low savings-to-debt ratio (defined as the amount of total savings compared to the amount of total debt a family carries). In May, only 27% of families reported having a positive savings-to-debt ratio, the lowest percentage in the history of the Index. 

Nearly two-thirds of consumers believe that the U.S. is currently experiencing a double dip recession, a stark increase from the 50% who shared this same sentiment last year; however, the second quarter ended with only 49% of respondents reporting being concerned with the state of the economy – the lowest level since the launch of the Index in early 2008. 

The Index also found a growing number of middle-class Americans expect to work well beyond traditional retirement age (see Staying Busy Trumps Financial Reasons for Postponing Retirement). 

The quarterly First Command Financial Behaviors Index is a monthly survey of approximately 1,000 U.S. consumers ages 25 to 70 with annual household incomes of at least $50,000.