Bank of America Survey Finds Americans Tightening Their Wallets

Americans are further from achieving their retirement goals amidst weakening economy.

A growing number of Americans are concerned that the current economic crisis is threatening to leave them further behind on their retirement plans, according to a new survey released today by Bank of America. The 2008 Bank of America Retirement Savings Survey, which reflects the mindset and behavior of approximately 1,000 people across the country, finds that six in ten (60%) Americans are spending less than they were three months ago as a result of the current economic climate. However, even with this decreased spending, more than half (51%) of the general public and 40 percent of affluent Americans are also saving less than they were three months ago, with approximately one in five citing that they're saving "much less."

The survey, conducted by Braun Research, sampled the general public and "affluent Americans," identified as individuals with investable assets between $100,000 and $3 million. Initial findings underscore how deeply troubled Americans are about their retirement savings and financial well-being, with close to one quarter (23%) of respondents indicating that the impact of economic turbulence on their retirement savings is the financial issue that concerns them most. "Today's economic conditions are clearly having a significant impact on Americans' near-term financial behavior, causing many to be or to believe they are in a less secure position to work toward their long-term retirement goals," said Craig Averill, personal retirement solutions executive for Bank of America. "Based on this survey, it appears that many Americans are not fully able to save what is needed to retire as they had planned, and some are tapping into their nest eggs to meet more immediate financial needs."

Although the majority of respondents with at least one retirement account say that they have not withdrawn assets from their accounts prematurely (68%), recent economic conditions have caused nearly one in five (18%) to withdraw assets prematurely. The leading reasons for these early withdrawals are near-term financial obligations, such as credit card debt (26%) and mortgage payments (22%), with an additional 22 percent citing recent job loss. If the economy continues to worsen, these numbers may increase significantly. The possibility of many more Americans dipping into their retirement savings could have profound implications for the country's future economic well-being.

In light of recent economic turbulence, many Americans (43%) believe they now face more years in the work force than they expected to one year ago. This will clearly affect Baby Boomers the most, or those approaching retirement who may not have time to recover the financial losses incurred during recent months. For this reason, it is not surprising that more than one third (36%) of affluent respondents said current economic conditions have pushed back their expected retirement age. According to responses to a Bank of America Retirement survey conducted earlier this year (March 2008), 53 percent of the general public and 36 percent of affluent Americans were either behind schedule or had not started their retirement planning efforts. Comparatively, according to findings from this latest survey, conducted in November 2008, 62 percent of the general public and closer to half (44%) of affluent Americans are either behind schedule or have not started their retirement planning efforts, indicating that Americans are getting increasingly off-track when it comes to planning for their financial futures.