A US deficit in savvy savers
Despite the booming economy, a surprising half of American households have less than $1,000 in net financial assets and modest or no wealth, says a new study.
The census-based economic analysis was released last week by the Consumer Federation of America (CFA), a nonprofit advocacy group, and Primerica, a Citigroup Inc. unit. Their surveys found that a high number of Americans may underestimate the power of saving.
For example, 40 percent of Americans in moderate-income households believe they are more likely to accumulate a $500,000 nest egg by winning a lottery than by socking away savings. And asked how much $50 invested weekly at a 9 percent annual yield would be worth after 40 years, the median response was $239,400 - a huge miscalculation from the actual figure: $1,026,853.
A main reason for the low cash assets, according to the study, is a "buy first, worry later" attitude. It found that the median US household carries $8,800 of debt, $3,000 of which is devoted to paying off credit-card bills and other consumer loans.
The survey, however, does underestimate the financial worth of the average US household by not including 401(k) or other qualified retirement-plan savings.
For tips on managing your money, check out the Primerica/CFA Web site: (www.consumerfed.org).
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