Study: Consumer Debt Saps Retiree Savings

Fidelity Investments Study Finds High Consumer Debt Is Slowing Growth Of Retirement Accounts

(AP)  High consumer debt is slowing the growth in retirement savings accounts, according to a study released Thursday by Fidelity Investments.

The mutual fund company, which is based in Boston, found that just one in three employees of nonprofit organizations increased their contributions to job-based savings plans in 2007. Some 44 percent of participants in the survey also admitted to personal debt exceeding $5,000, not including their mortgages, the study found.

The impact of debt could be seen in the breakdown of savings by people who considered themselves investors, savers or spenders. The spenders tended to carry higher debt than people in the other categories.

Some 42 percent of people who considered themselves investors raised their contributions in 2007, compared with 30 percent of savers and 25 percent of spenders, the study found.

"The good news is that overall, we have one-third of our participants saving more," said John Begley, executive vice president of Fidelity Investments. "The bad is that debt is hampering people from saving more."

The results of the study of workers in such areas as health care, education and government "suggest that more work needs to be done" by participants and the sponsors of retirement plans. Most workers in the nonprofit sector participate in 403(b) plans, which take their name from a section of the IRS code. They are similar to the 401(k) plans sponsored by private sector companies.

Fidelity said that participants in the nonprofit sector contribute an average of 8 percent of their income to their retirement accounts, slightly above the 7 percent deferral rate for those in the private sector.

Begley said more plan sponsors should adopt automatic enrollment for workers as well as automatic annual increases in contributions.

"In a survey a year ago, we asked about automatic increases," he said. "Two-thirds of tax exempt employees felt it would be valuable to have automatic increases built into plan design."

The latest study involved 1,524 employees in the nonprofit arena; the survey conducted in November had a margin of error of plus or minus 2.5 percentage points.

[mitywhity]

Ron Paul is the ONLY candidate that is discussing this coming financial collapse and understands the incredible economic dangers we face.




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Posted by RPsupporter ............................................................NO, he is not the only one. Ron is a good man, but he is not all-wise and chief.

[rpsupporter]

CONTINUED.....

This excessive money creation process is primarily responsible for the food price increases.

The US is on the brink of a financial catastrophe. The dollar is in freefall on foreign exchange markets and there are increasing signs that governments and investors around the world are looking for alternative currencies to use for investment vehicles. The US government owes over $9 trillion. It is in debt to Foreign Governments a total of over 2.3 Trillion dollars and these foreign governments are not all friends %u2013 almost $700 billion is owed to China and the Oil Exporting Countries in the Middle East.

In the last 40 years, the cost of living has increased tenfold while incomes have increased by less than half that. The standard of living for the average American has been steadily decreasing since the 1960''s.

Read an interesting article a few days ago - the average standard of living in the UK just surpassed the average standard of living in the US.
http://www.foxnews.com/story/0,2933,320508,00.html


Ron Paul is the ONLY candidate that is discussing this coming financial collapse and understands the incredible economic dangers we face.

[rpsupporter]

Just 40 years ago a coke or a cup of coffee costs 10 cents, a gallon of gas costs 30 cents, a new car costs $2,500 and a new house cost $25,000.

Today a coke or cup of coffee is over $1.00, gas is $3.00, the new car cost is about $25,000 and the new single family house averages $250,000 or more. Over the last 40 years, prices for all these commodities have increased by a factor of about 10 times or more.

This means that in the last 40 years, the dollar has lost 90% of its purchasing power. Today you need $10.00 to pay for what you use to be able to buy for $1.00.

Why has the US $ lost 90% of its value? Because in the last 40 years the Federal Reserve has printed increasing amounts of paper money to fund excessive government spending for wars, welfare programs, and expanding and maintaining the American empire %u2013 and this paper money has no gold backing. The result has been constant inflation.

And the problem is going to get a lot worse.

CONTINUED....

[mcv57]

Has anybody else noticed a really substantial increase in your grocery bill these past few months? With groceries and gas going up, my home equity going down the tube, I''''m starting to get quite nervous. Just hope I can work until I die. I don''''t want to live in a cardboard box under a bridge.

Posted by gretagreen

If you have job, at least your entire paycheck will go for a loaf of bread (Revelations). Other than that I would hurt myself to collect Social Security - turn that cardboard senario into a trailor house.

[mcv57]

Buckwacker has allowed the oil mongos take what they can get while his time is short. It won''t easy until he has lost power. The historians are going to remember this as The Age of Government Profiteering.

[hypnotoad72]

In an economy that thrives on consumer spending, whose government must be the biggest by far, why are so many media articles now talking about saving -- when it used to be the other way around?

[gretagreen]

Has anybody else noticed a really substantial increase in your grocery bill these past few months? With groceries and gas going up, my home equity going down the tube, I''m starting to get quite nervous. Just hope I can work until I die. I don''t want to live in a cardboard box under a bridge.

[usayesterday]

Well, if I don''t buy my groceries on my credit card...

...I won''t be able to afford the groceries...

...therefore I would not be able to eat...

...and thus, I would not live to retirement age because of POOR NUTRITION!

But there are hundreds of millions of people in the same boat as me.

Sorry Fidelity... we''ve got more important things to pay for other than your investment FEES!

[mrbrill]

Huh? I don''t know who your financial advisor, cbscrash07, but I know that I don''t want to use him. The article makes perfect sense. People who have no control of their spending, have higher debt, and sacrifice their retirements to pay for their high expenditures. I feel fortunate that even though I am in my 40s, I put a high priority to my retirement fund and despite the fact that investments in market has risen around 2% per year over the last 8 years (based on the DOW average), I am closing in on having $1M in liquidity. I wonder where you are.

[gkc99]

And to encourage savings, the Darth Bushit regime cuts interest rates once again to prop up profits for Bushit''s Billionaires.

Smart!

[drivelphobe]

cbscrash07..

Thanks for the tip. That''s not one of the techniques I''ve tried, but I''m game. Do I owe you a fee? I probably have to buy the darts from you!

[Syndicate]

What???? This looks more like propaganda disguised as a study. If anything high consumer debt should raise demand for invested capital and increase the return. Of course this is an Investment company talking about Non-profit org employees inorder to let the rest of us know we are not investing enough money with them. I read somewhere once that if you took the stock page from the NY times and threw darts at it and bought those stocks you would outperform most Market Funds.