Benefits March 30, 2009

Recession Has Changed Americans' Savings Views

March 30, 2009 (PLANSPONSOR.com) - Americans say that even after the recession ends, their spending will return to just 86% of pre-recession levels, which equates to an approximate 10% drop, or more than $1 trillion annually, in GDP, according to a new survey by AlixPartners LLP, a global business-advisory firm.
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In addition, a press release said survey respondents indicate this new, lower level of spending is structural and could last for nearly a decade after the recession ends. Seventy-seven percent of those surveyed said that even post recession they plan to wait for sales; 66% said they plan to buy less in general; and 58% said they plan to buy less-expensive things.

On the savings front, the survey revealed that once the recession ends, Americans plan to save 14% of their total earnings, with the replenishment of their 401(k) and other retirement savings their biggest long-term concerns, according to the press release. AlixPartners pointed out that the U.S. Bureau of Economic Analysis shows Americans saved 1.6% of their total earnings in 2008 and just 1.4% on average for the decade prior.

Survey participants estimated that their retirement savings have dropped an average of 25%, and almost a quarter of those polled (22%) said they now plan to retire later than previously expected. Among that number, the expected retirement age jumped up 3.6 years compared with their earlier expectations to over age 65, versus about age 61-1/2 before. When asked why they now expected to retire later, 30% cited loss of savings or retirement.

The survey plus additional analysis by AlixPartners revealed that the huge Baby Boom generation, once thought to be moving into the years in which they would be spending their retirement savings, may instead be accounting for more than a third (35%) of total dollars saved by Americans post-recession.

Eighty-two percent of those polled say they will use upcoming government tax rebates not to stimulate the economy via immediate spending, but instead will save that money or use it to pay down personal debt. And for those planning to save the stimulus money, they reported they would be keeping that money in savings for three years on average.

The AlixPartners Long-Range Economic Outlook survey was conducted February 19 to March 3, 2009, with 5,031 people in the U.S. across ten key demographics. Highlights of the survey can be found at www.alixpartners.com .

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