With the country still suffering from an economic hangover resulting from the Great Recession, many Americans have been forced to put their saving plans on pause in order to make ends meet. Additionally, many individuals have been forced to borrowing from their 401k retirement funds or their children`s college savings accounts in order to afford daily living expenses.
“People are at a loss, and they are struggling,” said the director of retirement research at the consulting firm Aon Hewitt Pam Hess, according to Reuters.
The latest annual retirement confidence survey released by the not-for-profit Employee Benefit Research Institute revealed that 27% of those polled in 2011 claim to feel “not at all confident” that they will have enough money saved to enjoy a comfortable retirement, with close to 15% of participants anticipating the need to continue working until they reach age 70 or older.
Some experts are concerned that the recent increase in credit card usage is an indicator that a vast number of households find that they have no choice but to amass new debt simply in order to cover their daily living expenses.
The numbers indicate that despite a brief increase in post-recession savings, the amount Americans are setting aside has dipped back down to its lowest rate since the start of the country-wide financial crisis in December 2007. According to data released by the U.S. Commerce Department, in November 2011 the rate of personal savings fell to 3.5% from the previous year`s rate of 5.1%, according to Credit Land research.
Retail sales in December rose, but were sluggish. In fact, retail sales growth was the weakest in December as it had been during the seven months prior. According to the expectations of The National Retail Federation, sales are projected to increase by 3.4% in 2012, lower than the 4.7% increase of last year.
Michael Germanovsky, personal finance expert and editor-in-chief at CreditLand.com, said “All indicators that we monitor point to rising costs in food and energy. Combined with steady high unemployment, and election year uncertainty ahead of us, we are seeing a direct impact on savings rates.”
In fact, an article in Reuters recently pointed out thatmost industry economists are in tune with Credit Land opinion, and do not expect overall economic growth to be much greater than 2%, which is only a slight improvement over the growth pace in 2011.