U.S. Workers May Not Save Much, but More Than Global Peers

BOSTON – You can't go too far these days without hearing some story of how Americans are lousy savers. Those stories come out of a savings rate that has shrunk, roughly, to zero and growing credit-card debt highlighting the fact that many people are spending money they don't have.

And yet, if Americans are poor savers perhaps the rest of the world is in really bad shape. A global retirement survey released Tuesday by AXA Equitable, shows that U.S. workers save an average of nearly $700 a month for retirement, topping the regular savings of the average worker in 11 other countries.

The $696 in retirement savings is more than double the amount saved by workers in France, Italy and Germany and nearly 10 times the amount saved by workers in China.

In one other key difference between the countries, however, the survey respondents — a group of workers and retirees from each nation — see the U.S. pension system as shaky, so that America is lagging most other countries in terms of pension confidence. People in Hong Kong, China and Spain are confident in their country's pension system; nearly 90 percent of the Chinese respondents believe in their current system.

Not only does one-third of the U.S. population believe the current American pension system will be extinct by the time they reach age 75, according to the survey, but 95 percent of the working Americans surveyed said that Social Security is in trouble (a conclusion that more than 85 percent of retirees agreed with).

That means that Americans are thinking much the same way Federal Reserve Chairman Ben Bernanke is, as he warned a Senate Budget Committee that America could be headed to a fiscal crisis if Social Security and Medicare aren't revamped.

"Longer life expectancies are certainly to be welcomed," Bernanke said during his prepared remarks. "But they are likely to lead to longer periods of retirement in the future, even as the growth rate of the work force declines. ... The longer we wait (to overhaul the system), the more severe, the more draconian, the more difficult the objectives are going to be. I think the right time to start was about 10 years ago."

Of course, that is the same time that most financial advisers suggest that average consumers should have started saving, or should have increased their set-asides.

Connecting the whole thing makes for an interesting outlook for the typical consumer.

Start with the disconnect between the microscopic savings rate and the best-in-the-world set-aside of the AXA Equitable study. (Part of that dichotomy is explained in the way the savings rate is calculated; it includes the behavior of those who have already retired and are thus drawing down savings and not adding to them.)

OK, so maybe savings is not so dire, until you factor in the lack of confidence in Social Security.

"People are getting the message that they need to take personal responsibility for their retirement," says Ken Gelman, director of Market Research for AXA Equitable. "What they're not clear about is whether they are doing enough, how much they need to have a retirement that meets their expectations, and whether they deserve to be more optimistic than everyone else in the world about what life is going to be like in retirement."

Gelman notes that the moral of his firm's study is "not that we're doing better than the rest of the world," but rather that saving is not enough. "You need to have an idea of where you're going and how much money you will need when you get there."

The lesson of the study: If you're saving less than $696 a month for retirement, you're behind the curve. But if you're saving that much or more, you shouldn't feel comfortable about it until you know that it's "enough."