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Savings Rate Jumps to 5.5%, But 25% Save Nothing

The average U.S. household’s savings rate jumped to 5.5% last year, up from 4.6% in 2013, according to a new household finance study by Hearts & Wallets.





The picture of household wealth isn’t all rosy, however. The study found that one-fourth of all Americans saved nothing at all, and that younger and less affluent consumers struggled with more non-mortgage debt. 




“The increasing savings rate is good news, but averages can be misleading,” said Laura Varas, a Hearts & Wallets partner and co-founder. “People with less assets are struggling. It’s impossible to ‘save for retirement’ without first getting out from under debt. The data provide insights into ways people can improve savings rates and how financial services firms can help by, for example, incorporating debt and real estate into the scope of savings advice.”





The study shows a drop of seven percentage points in contributions to employer sponsored plans last year, from 29% in 2013 to 22% in 2014. “The dip may be because the #1 financial goal in 2014 was to build up an emergency fund, followed by having enough money to work less, not retire per se,” explained Varas. The average percentage of savings that were earmarked for employer-sponsored plans also dropped: Participating households put an average of 39% of savings into their employer-sponsored plan, down from 49% in 2013.





The study, State of Retirement Funding and Household Finances in 2014: Income Sources, Savings, Spending, Debt, Real Estate & Retirement, analyzed more than 5,500 U.S. households nationwide. 

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