Less Than Half of U.S. Households Report Good Savings Progress

Only two-fifths (40 percent) of U.S. households report good or excellent progress in “meeting their savings needs,” according to the ninth annual America Saves Week survey.   The survey was released at the start of the tenth annual America Saves Week, in which more than 1,800 nonprofit, government, and business organizations at the national, state, and local levels have joined to promote personal savings.

This widespread lack of savings progress is consistent with other survey findings, including:

• only 49 percent of respondents report saving at least five percent of their income;
• just 52 percent say they are saving enough for retirement with a “desirable standard of living;”
• only 43 percent report engaging in automatic saving outside of work; and
• just 38 percent say they have no consumer debt.

However, the survey also indicated that two-thirds of Americans are making at least modest savings progress. 70 percent reported at least some progress in meeting savings needs, 66 percent reported saving at least some of their income, and 63 percent reported that they have “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.”

Overall, men responded more positively to survey questions than women. the survey found that results indicated more positive responses from men than women on twelve separate questions, with differences ranging from five to thirteen percentage points. “The most important reason for the gender gap in savings is differences in income and wealth,” noted Stephen Brobeck, CFA Executive Director and a founder of America Saves.  “The fact that men have larger incomes and financial assets than women makes it easier for them to save.”

The survey also found that those with a “savings plan with specific goals” save more successfully than those without a plan.  “The research clearly demonstrates that those with a plan are nearly two times as likely to spend less than they earn and save the difference,” said America Saves Director Nancy Register. “America Saves Week is the perfect opportunity for everyone to set a savings goal, make a savings plan, and save automatically,” she added.

For more information about America Saves and America Saves Week, please go to www.AmericaSaves.org and www.AmericaSavesWeek.org.

 

Bills Would Perpetuate Harm DOL Fiduciary Rule Is Intended to Address

Two bills being promoted as more “workable” alternatives to the Department of Labor’s fiduciary rule would perpetuate the problems the DOL rule is intended to address, according to an analysis released last month by CFA and the AFL-CIO.

H.R. 4293 and H.R. 4294 – the “Affordable Retirement Advice Protection Act” and the “SAVERS Act” – include some provisions that on the surface appear to be consistent with the DOL’s goal of ensuring that all retirement savers receive retirement investment advice that serves their best interests, but other conflicting provisions cancel out all of the legislation’s apparent protections, the groups concluded. As a result, the bills would leave retirement savers no better protected than they are today, the groups concluded.

CFA and AFL-CIO measured the bills against three standards:

• Do the bills apply a best interest standard to the full range of services perceived, and reasonably relied on, as retirement investment advice by working people and retirees?
• Can individual investors enforce the best interest standard?
• Do the bills reduce financial incentives for advisers to act in ways that are not in their clients’ best interests?

As the CFA/AFL-CIO analysis explains in greater detail, the answer in each case is an unequivocal no.

“Financial industry opponents of the DOL rule have been aggressively promoting these bills to members of Congress as some sort of compromise that delivers the benefits of the DOL rule without the regulatory burdens,” said CFA Director of Investor Protection Barbara Roper. “But nothing could be further from the truth. Firms that wish to avoid their best interest standards could continue to do so simply by changing a few words in their legal disclaimers. Working families and retirees who struggle to afford a secure and independent retirement deserve better.”

 

CFA Praises CPSC at House Hearing Seeking “Industry Perspectives”

The Consumer Product Safety Commission (CPSC) has been working hard to fulfill its mission to protect the public from unreasonable risks of injury or death associated with the use of consumer products and has been effectively implementing the Consumer Product Safety Improvement Act (CPSIA) , CFA Legislative Director Rachel Weintraub said in testimony last month before the House Commerce, Manufacturing and Trade Subcommittee.

As CPSC was not invited to testify, CFA was the only consumer perspective heard during the hearing on “Industry Perspectives” on the CPSC.   In light of the industry-oriented focus of the hearing, Weintraub began by highlighting the CPSC’s work to communicate with business about CPSC rules. “CPSC has recently released a regulatory robot, which will help small businesses determine which product safety rules apply to their product,” stated Weintraub. “While general information has been available, this is the first time that information is available in one place and can be applied to a potential product in real time.”

Weintraub also urged the CPSC to prioritize emerging hazards with hoverboards and crumb rubber, products the CPSC is actively investigating for their potential safety and health concerns.

Weintraub argued, however, that implementation of the CPSIA should continue to be the highest priority for CPSC. “The CPSC has been effectively prioritizing CPSIA implementation. The CPSC has promulgated more rules than it ever has in its history and has done so in a relatively short period,” she said. “The rules are substantively strong and have an important and positive impact on consumers.”

In conclusion, Weintraub noted that “the CPSC plays a critical role ensuring that consumers are safe from product hazards. They have made significant strides in consumer protection,” she said, “and could do even more with increased resources.”

 

House Bill Would Promote Bait and Switch Pricing for Airline Tickets

Before reporting out H.R. 4441, the Aviation Innovation, Reform and Reauthorization Act, last month, the House Transportation and Infrastructure Committee adopted an amendment to reverse a 2011 rule that requires airlines to advertise tickets at the price that the consumer will pay.  Consumer groups, including CFA, wrote to members of the Senate Committee on Commerce, Science and Transportation urging them to oppose any effort to replicate this measure in the Senate.

“If adopted, the amendment would result in the classic ‘bait and switch’ for consumers who believe they are purchasing a ticket at one price, only to find out at the last moment that the price is much higher,” the groups stated in a letter to the Senate Committee. “The amendment would allow the airlines to conceal their own extra fees and charges until the last moment before consumers purchase their ticket. This would be especially problematic on the Internet, where it might require extra clicks to obtain full price information.”

The groups state that amendment is blatantly anti-consumer and serves no purpose other than to mislead consumers about the real price of air travel. “We need real transparency and not smokescreens,” said CFA’s Director of Consumer Protection and Privacy Susan Grant.

 

Super Bowl Ads on Fuel Economy Reveal Car Maker Winners and Losers

With gas prices at historic lows and an estimated $90 million spent by automakers on Super Bowl ads, one would expect gas guzzlers to be the focus of advertisements during one of the most watched television events. However, according to an analysis by the Consumer Federation of America, most of the vehicles advertised during the Super Bowl were CAFE complaint, with only a few penalty flags flying for automakers promoting cars that fail to deliver fuel economy savings to consumers.

CAFE standards, which are set to rise to 54.5 mpg by 2025, are designed to enable manufacturers to gradually increase vehicle fuel efficiency across each of their vehicle classes. Of the ten specific models advertised during the Super Bowl, six were CAFE compliant while four failed to make the grade. “There were some fuel economy MVPs on TV during the big game, but automakers still spent millions of dollars promoting vehicles that are off sides when it comes to fuel economy standards,” said Jack Gillis, CFA’s Director of Public Affairs and author of The Car Book.

The Super Bowl fuel economy winners were the Ford F-150, Hyundai Elantra, Kia Optima, Mazda MX-5, Mini Clubman, Subaru Impreza, and Toyota Prius with all, or some of their mentioned trim lines CAFE compliant.   Receiving Super Bowl CAFE penalty flags were the Buick Cascada, Hyundai Genesis and Jeep Wrangler, with none of their advertised vehicles being CAFE compliant.

“Gasoline is still a necessity of daily life and a very large household budget item.  Even at $2.00 a gallon, the average household spends about $1,500 a year on gasoline, which is about as much as electricity, telephone service and household equipment and furnishings,” said CFA Research Director Mark Cooper. “Even at today’s lower gas prices, spending more for fuel efficient vehicles is a good investment – the savings on fuel exceeds the cost of the technology over the life of the vehicle.”

In CFA’s national surveys, consumers regularly express concerns about future gasoline prices.  “Consumers understand that the best offense is a good defense, so the only way to avoid being blindsided by a gasoline price blitz is to buy more fuel efficient vehicles,” said Gillis. “Car advertising absolutely impacts and influences the choices consumers make. Unfortunately, the gap between the least and most efficient cars featured during the big game was huge.”