Squeeze on Household Incomes
After decades of continuous progress, the financial crisis has knocked household finances sideways. U.S. investors surveyed find themselves having to juggle a number of competing financial goals as incomes feel the squeeze. The aspiration to manage long-term finances and prepare for retirement remains strong, however, this aspiration is being dealt a blow as the need to pay off debts takes priority in the short and medium term. The percentage of take-home pay devoted to living costs, bills and debt is particularly high in the U.S. (49%) compared to the global average (40%).
These costs translate into widespread personal savings deficits in the U.S. Americans reported saving, on average, just 16% of their take-home pay each month—compared with the global average of 18%. And when asked what would encourage them to invest more of their cash savings, nearly one in three (32%) respondents indicated "less personal debt."