U.S. Savings Rate: Better than we thought (but not good enough)

savingQuick: What is America’s national savings rate?  If you guessed less than 5%, you’d be close, but the scarier figure reported by the U.S. government’s Bureau of Economic Analysis (BEA) this year was just over 2%. This precipitous decline in savings by Americans has been the source of a lot of hand-wringing especially when compared to their 10% savings rate just a generation ago. There was a brief period after the Great Recession when folks were saving at higher levels—up to nearly 9% according to BEA figures—because the market drop inspired a surge in debt repayment. However, the trend since then has been dismal.


The BEA went back to the numbers and realized that it had incorrectly calculated the U.S. savings rate since the beginning of 2002.  The chart below plots its previous estimates (blue line) and revised ones (red line) which shows a relatively-consistent savings rate of 6-7% after the post-recession spike.  The hand-wringing was not quite as necessary as we thought.

Savings Rate Chart

What happened?  BEA researchers collect data from a variety of sources to determine American’s average income levels and average total expenditures.  The difference is assumed to be the savings rate (if you earn it and you don’t spend it you must be saving it, right?).  The revised figures came when the researchers took a second look at data coming from the IRS and realized that small businesses were not claiming their full income due to a variety of deductions they were entitled to take.  That revision caused the aggregate savings rate to jump.

What does that mean? Are we saving enough? It means that 6% savings is better than 2% savings, but many people are still living precariously, saving far too little for emergencies and their future retirement. It also means that many business owners are doing much better than the government apparently realized and the economy has enough capital from savings to sustain it without fear of low savings contributing to a recession.

Unfortunately, the financial health of the economy overall and small business owners specifically will not help the average American pay for a new transmission, their daughter’s college tuition, or their own retirement. Only a disciplined savings strategy based on a foundation of spending less than is earned (10% is a nice starting point) will put the average American on the path to financial security.

If you’d like more on savings strategies, check out our previous blogs on emergency savings here, savings strategies for recent graduates here, and my financial love note to my daughters (full of all kinds of great financial tips!) here.

Enjoy and be sure to call if we can help you determine how much you should be saving to achieve everything that’s important to you—plus some for emergencies!

Evelyn Zohlen on Linkedin
Evelyn Zohlen
“My own life-changing transition inspired me to start Inspired Financial so that I could help other women and their families navigate their difficult life transitions and emerge confident, financially secure and empowered to deal with future life events.”

One Comment


We belived in savings. Thanks to our company 401K we retired with a nice amount due to our maxing out what we were allowed to contribute at that time, 16 percent. There was a company match for the first 6% but I don’t recall remember the amount, I’m thinking 50 cents for each dollar. By the time we left, company pensions were discontinued so what we had was from our own contributions. We’re so glad we did it now that we are living on those funds. We never built up other savings on our own for retirement. We would save for special wants and then use it on those wants. Hind sight is great, knowing what we know now we would saved additional funds for retirement but here we are now, trying to make sure we don’t outlive our funds. All in all, life is good for us. We do incourage all our younger family and friends to be sure to pay themselves first. We tell them they will never get rich just by working, saving is so important for a good retirement.


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