2012 HOUSEHOLD FINANCIAL PLANNING SURVEY potx

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2012HOUSEHOLDFINANCIAL
PLANNINGSURVEY
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ASummaryofKeyFindings
July23,2012
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Preparedfor:
CertifiedFinancialPlannerBoardofStandards,Inc.andtheConsumerFederationofAmerica
Preparedby:
PrincetonSurveyResearchAssociatesInternational
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2
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Contents
EXECUTIVESUMMARY 3
KeyFindings 3
AMuchTougherEconomicLandscapeforAmericanFamilies 3
MostPeopleFindManagingFinancesDaunting 4
FewerHavingSavingsforEmergenciesandChild’sCollege 5
MajorityHaveaPlanforSpendingGoal ,butFewhaveaFinancial Plan
5

PlannersMoreConfidentAboutHandlingtheirFinances,FeelBetterabouttheirProgress 6
PlanningBenefitsAllIncomeLevels,notjusttheWealthy  7
AbouttheSurvey 7
SECTION1:CURRENTECONOMICLANDSCAPE 8
SECTION2:SAVINGANDPLANNINGTOMEETFINANCIALGOALS 9
Saving
andPlanningforEmergencies 13
SavingandPlanningforRetirement 14
Pre‐retirement 14
DuringRetirement 16
SavingtoSendaChildtoCollege 16
SavingandPlanningforOtherFinancialGoals 16
SECTION3:CREDITCARDDEBT 18
SECTION4:THEIMPORTANCEOF
FINANCIALPLANNING 20
EmergencyandRetirementPlanning 20
ComprehensiveFinancialPlanning 22
APPENDIX 26
SAVERSANALYSIS 26
METHODOLOGY 30
DesignandDataCollectionProcedures 30
WeightingandAnalysis 32
TOPLINE 38
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3
EXECUTIVESUMMARY
KeyFindings
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StillfeelingtheeffectsoftheGreatRecession,manyAmericanfamiliestodaystrugglejusttomakeends

meet.TheCFPBoard/ConsumerFederationofAmericaHouseholdFinancialPlanningsurveyfinds
peopletodayfacingtoughe rchoicesabouthowtoallocatemorelimitedfinancialresources.Saving
enoughmoneyforfuturegoalslikeretirement
andkids’college–whilealsomaintainingana dequate
emergencyfundandstayingoutofseriousdebt–hasalwaysbeenachallenge.Thiswastrueevenin
themorefavorableeconomicclimateof1997,whenPrincetonSurveyResearchAssociatesInternational
firstsurveyedhouseholddecision‐makersaboutthesetopics.In2012,
withhighunemployment,
stagnantincomesandreducednetworth,thosechallengesareevengreater.
Whiletheeconomicclimatehaschanged,financialplanningremainsacriticalfactorinseparatingthose
whoareontracktomeettheirfinancialgoals fromthosewhoarefallingbehind.Thenewsurveyfinds
peoplewho
planfeelmoreconfidentabouttheirfinancialdecision‐making,man agetosavemore
money,andfeelbetterabouttheirprogresstodateinsavingforfinancialgoals.Plannersscorehigher
infinancialpreparednessthannon‐plannersacrossincomegroups.Thebenefitsarenotlimitedtothose
whoarebetteroff.
Too
fewAmericanfamiliesaretakingadvantageofthisvaluabletooltohelpprotecttheirfamiliesfrom
thevagariesofanuncertaineconomicenvironment. ThepercentageofAmericanfamilieswhohave
madeacomprehensivefinancialplan–eitherontheirownorwithprofessionalhelp–hasnotchanged
significantlyfrom
15yearsago.Overall,onlyaboutathird(31%)ofdecision‐makerstodayreporthaving
everputtogethersuchaplan.Andjust35percentofdecision‐makersreporthavingaplaninplaceto
saveforemergencies,downfrom39percentin1997.
AMuchTougherEconomicLandscapeforAmerican
Families
RecentreportsfromtheFederalReserveshowthedevastatingeffectsoffinancialcrisisonthemiddle
class.Themedianfamily,richerthanhalfofallAmericanfamiliesandpoorerthantheotherhalf,hada
networthof$77,300in2010comparedwith$126,400in2007accordingtothe
Fed.Thismeansthe

averagefamilyhasnomorewealthtodaythanitdidintheearly1990s,wipingoutnearlytwodecades
ofeconomicgains.
1
Ournewsurveydocumentstheeconomicpainpeopl earefeeling.In2012,
householdswherepeoplelivefrompaychecktopaycheckoutnumberthosewherepeoplefeel

1
“FamilyNetWorthDropstoLevelofEarly90’s,FedSays,”byBinyaminApplebaum,TheNewYorkTimes,June11,
2012.

4
financiallycomfortable(38%vs.30%).Fifteenyearsago,wheneconomicconditionsweremuchmore
positive,thesenumberswerereversed–fewerpeopledescribedthemselvesasfinanciallystruggling
thansaidtheywerelivingthegoodlife(31%vs.38%).FormostAmericans,theirhomehasbeentheir
biggestfinancialasset,butthe
crashofhousingpriceshasbeenthesinglebiggestfactorthat has
reducedpeople’swealth.Today,one‐quarter(23%)ofthosewithamortgagesayitisunderwater,i.e.,
themoneyrequiredtopayitoffisgreaterthanwhatthepropertycouldsell forontheopenmarket.
Looking
ahead,20percentofnon‐retiredhomeownersthinktheywillstillbemakingmortgage
paymentswhentheyretire,upfrom14percentin1997.
Speakingofretirement,people’sexpectationsforhowearlytheywillbeabletoretirehavebeenscaled
backconsiderably.Fiftee nyearsago,half(50%)ofnon
‐retireestoldusthattheyexpectedtoretire
beforetheyturned65.Now,onlyathird(34%)believestheywillbeabletoretirethisearly.Morethan
aquarter(27%)thinktheywillnotbeabletoretirebeforeage70,ifever.Thiscompareswith15
percentin
1997.Infact,13percentofthosenotyetretiredtodayvolunteer thattheywon’teverbe
abletostopworking,comparedwith4percentwhowerethispessimisticabouttheirretirement
prospects15yearsago.

MostPeopleFindManagingFinancesDaunting
Astheeconomicenvironmenthaschangedfortheworse,
people’scomfortlevelwithfinancialmatters
hasnotimproved.Advancesintechnologyhavemadeaccessingandanalyzing financialinformation
mucheasier,butlackofunderstandingaboutsavingsandinvestmentsoptionsandhowtobestmanage
householdfinancesremainsaseriousobstacletoAmericans’financialpreparedness.
 55%say“it’shard
formetoknowwhototrustforfinancialadvice.”
 52%say“tomeinvestingseemscomplicated.”
 55%say“I’mworriedaboutlosingmymoneyifIinvestit,”asignificantincreasefrom1997
(45%)reflectinggrowinguncertaintyinresponsetothestockmarketturbulenceofrecentyears.
In
additiontothesebarrierstosoundmoneymanagement,halfofhouseholddecision‐makersbelieve
they“justdon’tearnenoughmoneytosaveregularly.”Majoritiesofthoseintheunder $25,000(61%)
and$25,000‐$49,999(64%)incomebracketsfeeldiscouragedfromsavingforthisreason.Eveninthe
$50,000‐$99,999category,
half(50%)feeltheirincomelevelisabarriertosavingregularly.Andone‐
quarter(26%)inthe$100,000ormorecategoryareinclinedtobelievethattheirincomeisinsufficient
toallowthemtosaveonaregularbasis.

5
FewerHavingSavingsforEmergenciesandChild’sCollege
Feelingmorefinancialpres suretodaythanin1997,Americanfamiliestodayarelesslikelytobesaving
fortheirfinancialgoalsandtakingstepstokeeptheirfamilyfinanciallyprepared.Likeitspredecessor,
thenewsurveyaskeddecision‐makersabouttheirsavingand
investmentsinsixspecificcategories.
Fewerpeopletodayreporthavingsavedtowardoneormoreoftheirgoalsthandidsofifteenyearsago
(80%vs.84%).Withlessmoneytogoaround,fewerAmericanshavestartedsavinginsomeimportant
areas:
 Fewerpeoplereportsavingforemergencies,leaving

theirfamilymorevulnerabletothe
upheavalcausedbyajoblossormajorunexpectedexpenses(63%vs.68%).
 Fewerofthoseinfamilieswithacollege‐boundchildhavestartedtosaveforcollegeeducation
(48%vs.56%),eventhoughcostsofacollegeeducationarerisingat
arapidpace.
Peopletodaymaybemoreinclinedtoputtheireconomicsecurityatriskto“keepupwiththeJoneses.”
Theonlyareawherefamiliesaremorepronetosaveistowardamajorpurchase,likeanewcar,
vacation,orhomeimprovementproject.
TheproportionofAmericansnot
yetretiredwhohaveatleastsomesavingsforretirementhasheld
steady.However,afterthehitmanyfamiliestookafterthefinancialmeltdownfouryearsago,more
non‐retireesfeeltheyarebehindwheretheyshouldbeinsavingfortheirretirement(51%vs.38%in
1997).
MajorityHave
aPlanforSpendingGoal,butfewhaveaFinancialPlan
MostAmericanfamiliesdosomekindoffinancialplanningtohelpaccomplishtheirsavingsgoals,but
relativelyfewhaveeverputtogetherthekindofdetailedfinancialplanthatmoneymanagement
expertsrecommend.Whenaskediftheywereimplementinga
plantomeetsavingsgoalsinsixspecific
areas,abouttwo‐thirds(65%)ofdecision‐makerssaytheyfollowaplanforatleastoneoftheirsavings
goals.Thiscompareswithonly31percentwhosaytheyhaveeverprepare dacomprehensivefinancial
plan–orusedaprofessional
toprepareone–thatincludesthingslikesavingsandinvestments,
retirementplanning,andinsuranceneeds.
Planningismostoftenreportedforsavingforone’sretirement.Asmanyashalf(49%)ofnon‐retirees
saytheyhavebegunsavingforretirementandfollowaplanorscheduleforhowoften,how
much,and
wheretheyaresavingorinvestingforthispurpose.Sincethe1990s,trendsinworkplaceretirement
benefitshaveshiftedawayfrompensionsandothervehicleswheretheemployermakesalldecisions
toward401‐kandsimilarretirementplanswhereemployeesmakedirectcontributionsanddecisions

themselves.Thesurvey
foundasignificantincreaseinhowmanyofthoseenrolledin401‐korsimilar

6
plansmakeannualcontributions(77%vs.66%).Despitethispositivetrend,thenumberofnon‐retirees
whosaytheyhaveaplaninplacetoinvestforretirementisessentiallyunchanged(49%vs.51%in
1997).
Asmightbeexpected,thosewithhigherincomesaremorelikelytoplan.Overhalf
(55%)ofthosewith
householdincomesof$100,000ormorehaveacomprehensiveplan,comparedwithroughlyathird
(35%)ofinthe$50,000‐$99,999bracket,andaquarter(25%)ofthoseinthe$25,000‐$49,999bracket.
Suchplansareararityamongthosewithincomeslowerthan$25,000(10%).
PlannersMoreConfidentAboutHandlingtheirFinances,FeelBetterabouttheirProgress
Familieswithgreaterfinancialresourcesaremuchmorelikelytobesavingfortheircurrentandfuture
financialgoals.Thenewsurveyshowsthatasfamilyincomelevelrises,sodoesthepercentageof
decision‐makerswhosaythey
haveatleastsomesavingsfortheirvariousgoals.Forexample,among
thosewithincomesunder$25,000onlyaboutthreein10(31%)haveanythingsavedforemergencies,
comparedwithninein10ofthosewithincomesof$100,000ormore.Similarrelationshipsbetween
incomelevelsandsavingsrateswere
observedin1997.Butwhileincomelevelmatters,financial
planningisanotherkeyfactordistinguishingthosewhoarebetterpreparedfinanciallyfromthosewho
arelesswellprepared.Thosewithacomprehensivefinancialplanshowthems elvestohavethe
followingadvantagesovernon‐planners.
Byamarginof52percentto
30percent,plannersaremorelikelytofeel“veryconfident”about
managingmoney,savingsandinvestments.Inallfourincomecategoriesusedforanalysis,plannersare
foundtobesignificantlymoreconfide ntthanthosewithoutacomprehensivefinancialplan.Planners
arealsomorelikelytofeeltheyareonpace
inmeetingalltheirspecificfinancialgoals,suchassavingfor

retirement,emergencies,andcollege(50%vs.32%).Inallexceptthelowestincomecategories–where
fewhaveacomprehensiveplan–plannersaresignificantlymorelikelytofeelgoodabouttheirprogress
towardmeetingkeygoals.
Plannersarealso
morelikelythannon‐plannerstodescribethemselvesas“livingcomfortab ly” (48%vs.
22%).Thebenefitsherearemostevidentinthetwohighestincomecategories.Thosewitha
householdincomeof$100,000ormoreandacomprehensiveplanaremostlikelytofeeltheyareliving
thegoodlife.
Butitisnoteworthythatasmanyplannersinthe$50,000‐$99,999incomebracketsay
theylivecomfortablyasthoseearning$100,000ormorebutdonothaveacomprehensivefinancial plan
(50%vs.46%).

7
PlanningBenefitsallIncomeLevels,notjusttheWealthy
Thebenefitsofacomprehensivefinancialplanarefurtherdemonstratedbythesmartsavingandmoney
managementpracticesassociatedwithit.Forthoseathigherincomelevels,plannersputmoreoftheir
incomeintosavingsthannon‐plannersandreporthavingbuilt
greaterwealth.Forexample,planners
withincomesof$50,000‐$99,999aremorelikelythannon‐planne rstosaytheysave10percentoftheir
incomeormore(57%vs.39%)andtohaveaccumulatedatleast$100,000ininvestmentssofar(37%vs.
19%).Similardifferencesarefoundbetweenplanners
andnon‐plannersinthe$100,000ormore
incomebracket.
Financialplanningisoftenseenasatoolforthemoreaffluent,butthesurveypr ovidesstrongevidence
thatthosewithmodestincomesalsobenefit.Familieswithfewerfinancial resourcesaremost
vulnerabletocreditcarddebtspiralingoutofcontrol.
Havingafinancialplanisassociatedwithhandling
creditcardbillsinawaythatminimizesriskofcreditcarddebtproblems.Amongthoseinthe$25,000‐
$49,999incomecategory,46percentofthosewithaplansaytheyusuallypaytheircreditcardbillinfull
eachmonth,compared

with26percentofnon‐planners.Themarginis41percentto16percent
betweenplannersandnon‐plannersintheunder$25,000category.
AbouttheSurvey
TheseareamongthefindingsofasurveyjointlysponsoredbyCertifiedFinancialPlannerBoardof
Standards,Inc.andtheConsumerFederationofAmerica.Thesurveyincludedtelephoneinterviews
witharepresentativesampleof1,508financialdecisionmakersnationwide.Thesurvey,conductedby
PrincetonSurveyResearchAssociatesInternational,askedquestionsabout
thehousehold’sfinancial
goalsandliabilities,thehousehold’sstrategyforsavingandinvesting,aswellasspecificsofhowmuch
wasbeingsavedandinvested.Sixfinancialgoalswereinvestigatedindepth:savingforemergencies,for
retirement,foramajorpurchase,forachild’scollegeeducation,foradownpayment
onahouse,andto
helpaparentorolderrelativewithlivingormedicalexpenses.InterviewswereconductedfromMay7‐
20,2012.
Themarginofsamplingerrorforresultsbasedontotalsampleatthe95percentlevelofconfidenceis
plusorminusthreepercentagepoints.Questionwording
andthepracticaldifficultiesinconducting
surveyscanalsointroduceerrorinsurveyestimates.Adescri ptionofthesurveymethodologyanda
questionnaireannotatedwiththesurveyresultsareincludedintheappendixthatfollowsthedetailed
findings.

8
SECTION1:CURRENTECONOMICLANDSCAPE
Theeconomiclandscapehaschangedsignificantlyinthe15yearssince thissurveywaslastconducted.
TheCFPBoard/ConsumerFederationofAmericaHouseholdFinancialPlanningsurveyfindsthatdecision
makerstodayarehavingatoughertimeintoday’seconomy.Thecurrentsurveymeasuredmanyofthe
sameattitudesandbehaviorsas
theinitialsurveydidin1997.Formanytheirpersonaleconomic
conditionsarenotaspositiveasin1997.Today,just30percentoffinancialdecisionmakers
2

saythey
livecomfortably,comparedwith38percentwhoreporteddoingsoin1997.Conversely,moredecision
makersreportthattheyhavejustenoughtomeettheirbasiclivingexpensesortheydon’thaveenough
tomeettheseexpenses(38%),comparedwithjust31percentwhoreportedsimilarconditionsin
1997.
FormanyAmericans,theideaofahomeasafinancialinvestmenthasfaded.Whiletheoverallrateof
homeownershiphasremainedthesame,fewerdecisionmakerswhodonotownahomereportthat
theyplantobuyone(61%in2012v.69%in1997 ).Amongthose
whoalreadyownahomefewersay
theyarelikelytohaveitpaidoffbythetimetheyretire.In1997,82percentreportedtheywouldhave
theirhomepaidforbythetimetheyretire,comparedto76percentinthecurrentsurvey.Forabout
one‐quarterof
decisionmakers,theirinvestmentinahomehaslostmoney.Twenty‐threepercentof
thosewithmortgagessaythattheyowemoreontheirmortgagethentheycouldsell thehousefor.


Decisionmakers’perceptionsoftheirretirementhavechangedaswell.Inthecurrentsurvey,one‐third
(34%)of
thosenotyetretiredsaytheywouldbeabletoretirebeforeage65.Thisisdownsignificantly
from50percentin1997whoreportedtheyexpectedtoretirebeforeage65(seeFigure1).

2
Financialdecisionmakerswereselectedbyasking“Whousuallymakesthefinancialdecisionsinyour
household?”Thosethatmakesolelyorsharethedecisionmakingwereeligibleforthesurvey.
50%
34%
0%
20%
40%
60%

80%
100%
1997 2012
Figure1:PlantoRetirebeforeage65
Basedonthosenotyetretire
1997
2012

9
SECTION2:SAVINGANDPLANNINGTOMEETFINANCIALGOALS
Whiletheconditionshavechangeddramatically,amajority ofdecisionmakersstillreporttheyhave
savingsorinvestmentsforatleastoneoftheirfinancialgoals.Eightin10Americans(80%)havesome
savingsforatleastoneofthefinancialgoalsaskedaboutinthe2012survey.Thisis
adecreasefromthe
84percentofdecisionmakerswhoreportedtheyhadsomesavingsforanyofthespecificfinancialgoals
inthe1997survey.
Althoughalargemajorityofdecisionmakersaresaving
fortheirfinancialgoals,manyfindfinancial
investmentsandstrategiesconfusing.One‐halfof
respondents
saythestatement‘investingseems
complicated’describesthemveryorsomewhatwell,
similartothe1997finding.Similarmajoritiesof
decisionmakersalsosay‘it’shardtoknowwhototrust
forfinancialadvice,’andthat‘I’mworriedaboutlosing
mymoneyifIinvestit’describesthemveryor
somewhat
well( seeTable1).Giventhevolatilestock
marketoverthepastdecade,itisnotsurprisingthata
largershareofrespondentsinthecurrentsurveysay

theyareworriedaboutlosingmoneyiftheyinvestit,
thandidsoin1997.
Inadditiontothecomplicatednature
ofinvestment
choices,foralargenumberofrespondentsthereare
alsobarrierstosaving,suchasbelievingthattheirearningsareinsufficienttosaveregularlyandthat
unexpectedexpensesmakeithardtosticktoabudget.
Lookingatthespecificsixgoalsaskedaboutinthesurvey,amajority
ofthosewitheachofthefollowing
goalsreporttheyhavesavingsforthem:emergencies,futureretirement, andamajorpurchase(see
Table2).Justaboutone‐halfreporttheyaresavingforachild’scollegeeducation,andfarfewer
decisionmakersreporttheyaresavingforadown
paymentforthepurchaseofahouseinthenext10
years,ortohelpparentsorotherolderrelativeswithlivingormedicalexpenses.

Table1:FeelingsaboutFinancialMatters
DescribesVeryorSomewhatWell…
It’shardformetoknowwhoto
trustforfinancialadvice
2012 55%
1997 54%
I’mworriedaboutlosingmy
moneyifIinvestit
2012 55%
1997 45%
Tome,investingseems
complicated
2012 52%
1997 55%
Iprefernottothinkaboutmoney

2012 43%
1997 42%
Unexpectedexpensesmakeit
hardformetosticktoabudget
2012 59%
1997 58%
Ijustdon’tearnenoughtosave
regularly
2012 51%
1997 54%

10
Table2:Saving&PlanningforSpecificFinancialGoals
Basedonthosewitheachspecifiedgoal

Total
Saving
forGoal
Saving&
HavePlan
forGoal
Savingfor
Goal,but
NoPlanfor
Goal
Total
Not
Saving
forGoal
N’s

Emergencies
2012 63% 35% 28% 36%
1508
1997 68% 39% 29% 31%
177
0
FutureRetirement    
2012 61% 49% 12% 39%
984
1997 64% 51% 13% 35%
1451
CurrentRetirement    
2012 62% n/a n/a 35%
524
1997 61% n/a n/a 35%
319
Majorpurchase
2012 60% 37% 22% 40%
643
1997 52% 32% 19% 46%
821
College
2012 48% 31% 17% 52%
409
1997 56% 36% 20% 43%
635
Downpaymentonhouse   
2012 34% 17% 17% 66%
228
1997 34% 15% 19% 66%

365
Helpparentswith
medicalexpenses
 
2012 14% 7% 7% 85%
437
1997 17% 10% 7% 82%
503
Therehavebeensomechangessince1997inthesharesofrespondentsreportingtheyaresavingfor
theirvariousgoals.Fewerfinancialdeci sionmakersreporttheyaresavingforemergenciesthandidso
15yearsago.Likewise,fewerdecisionmakerswiththegoalofsendingachildtocollegehavesavings

forthisgoal.
Akeycomponentofsavingsuccessfullyishavingapl antosave.Ingeneral,decisionmakerswitha
specificgoalareplanningforthisgoalaswell.Forexample,37percentofdecisionmakersaresaving
andplanningforamajorpurchase,comparedwith22percentwho
aresavingbutdonothaveaplan.
Whenlookingatplanningforone’sspecificfinancialgoals,theonlystatisticallysignificantchangefrom
1997isinhavingaplanforemergencyexpenses,few errespondentsinthecurrentsurveyreportthat
theyhaveaplanforsaving.
Unsurprisingly,annualincomeisclosely
relatedtowhetherahouseholdhassavingstomeetitsfinancial
goals.Asannualincomeincreasessodoestheshareofrespondentswitheachgoalwhosaytheyare

11
savingforallgoalsaskedaboutinthesurvey(seeTable3).Forexample,whilejust15percentofnon‐
retiredhouseholdswithannualincomes lessthan$25 ,000aresavingforretirement,thisrisestoabout 
halfofthoseinthenextincomebracket,toeightin10amongthose
withincomesbetween$50,000and
$99,999,andsavingforretirementisnearlyuniversalamongthosewithincomesof$100,000ormore.

Table3:SavingsforSpecificFinancialGoalsbyHouseholdIncome

Lessthan
$25,000
$25,000‐
$49,999
$50,000‐
$99,999
$100,000
ormore
PercentSavingfor… 
Emergencies 31% 59% 78% 90%
FutureRetirement 15% 53% 79% 97%
CurrentRetirement 33% 70% 80% 81%
Majorpurchase 33% 52% 64% 81%
College 19% 41% 58% 70%
Downpaymentonhouse 15% 32% 52% 51%
Helpparentswithmedical
expenses
7% 14% 12% 22%



12
Althoughmostfinancialdecision
makersaresavingforatleastone
financialgoal,asizableproportionsay
thattheyfeelbehindontheirprogress
orthattheyshouldhavestarted
alreadysavingfortheirfinancialgoals.

Sixty‐threepercentofhousehold
financialdecisionmakerswhoare
savingsaytheyhaveat
leastonegoal
thattheyfeelbehindon,compared
with57percentin1997.
Againstthebackdropofafluctuating
stockmarket,alargershareofnon‐
retiredrespondentsreportthatthey
feelbehindonsavingforretirement
thandidsoin1997(seeTable4for
individualgoals).
Todayone‐halfof
non‐retiredrespondents,compared
with38percentin1997,saytheyfeel
behindorshouldhavealreadystarted
savingforretirement.
Thosewithaspecificplanforsavingforthatgoaltendtofeelbetterabouttheirprogresstowards
saving.
3
Alargershareofthosewithaplanforsavingforcollegeeducationsaytheyareaheadthan
thosewithoutaplan(seeFigure2).Asimilarpatternisobservedwithrespecttosavingforfuture
retirementandemergencyexpenses.





3
Notallsamplesizeswerelargeenoughtoanalyze,includingdownpaymentonahouseandparents’medical

expenses.
Table4:FeelingofProgresstowardsSaving
forSpecificFinancialGoals
Basedonthosewitheachspecifiedgoal

Feel
Behind/Should
HaveStarted
Ahead/About
Right/Okto
StartLater
N’s
Emergencies 
2012 41% 54%
1508
1997 39% 57%
177
0
Future
Retirement

2012 51% 45%
984
1997 38% 60%
1451
Majorpurchase 
2012 38% 58%
643
1997 36% 60%
821

College
2012 52% 42%
409
1997 45% 52%
635
Downpayment
onhouse

2012 48% 49%
228
1997 46% 51%
365
Helpparentswith
medicalexpenses

2012 41% 46%
437
1997 32% 58%
503

13

SavingandPlanningforEmergencies
Akeyelementinfinancialpreparednessishavingsavingsforthoseunexpectede xpenses and
emergencies,suchasthelossofajoboranunforeseenmedicalexpense.WhileamajorityofAmericans
reporttheyhavesavingsforemergencies(63%),fewerhavesavingsthandidso
in1997when68
percentreportedhavinganysavingsforemergencies.
 Thosemostvulnerableareleastlikelytohavesavingsforemergencyexpenses.Thirty‐one
percentofthosewithincomelessthan$25,000,comparedwith75percentofthoseearning

more,reporttheyhavenosavingsforemergencies.
 Those
inahouseholdwithjustoneemployedpersonarealsolesslikelythantwo‐worker
householdstohaveemergencysaving(62%v.74%).
Whileamajorityhavesavingsforemergencyexpenses,asignificantsharestillfeeltheyarebehindor
shouldhavealreadystartedsavingforemergencies(41%),similarto
the39percentwhoreportedsoin
1997.
One‐thirdofAmericans(35%)reporttheyhaveaspe cificplanforhowoften,howmuchandwhereto
saveandinvesttheirmoneyforemergencies.In1997,aslightlylargershare(39%)reportedthesame
planning.
Likewise,fewerAmericanssavingforemergencies
areputtingtheirmoneyinaseparatesavingsor
investmentaccount.Inthecurrentsurvey,aboutone‐half(48%)reporttheirsavingsareinaseparate
account,downfrom60percentin1997whoreportedkeepingtheiremergencysavingsseparatefrom
therestoftheirmoney.
20%
15%
17%
2%
3%
10%
0%
10%
20%
30%
40%
50%
College FutureRetirement Emergencies
Figure2:FeelAheadonSavingforGoal

Planforspecificgoal
NoPlan

14
Although,fewerrespondentsaresavingforemergenciesthanin1997,thosewhohavesomesavings
havesimilaramountssavedasthoseinthe1997survey.Aboutone‐halfofdecisionma kershaveno
savingsorhavelessthan3monthsofemergencylivingexpensessaved(seeFigure3).Similarresults

wereobservedin1997.

SavingandPlanningforRetirement
Inthecurrentsurvey,threeinfourdecisionmakers,workingandretired,havesomesavingsor
investmentsallocatedfortheirretirement(73%).Thisissimilartothe1997finding,when anequal
shareofalldecisionmakersreportedtheyhadsome
savingsforretirement.Theseretirementsavings
canbeeitherthroughanemployerprovidedplanorsettingmoneyasideforonone’sownfor
retirement,suchasinanIndividualRetirementAccount(IRA).
Pre‐retirement
Inthecurrentsurvey,sixin10respondentswho arenotyetretiredsaytheyha ve
atleastsomemoney
savedorinvestedfortheirretirement,while39percentreporttheyhavenosavingsforretirement.This
findingissimilarto1997(seeTable5).





15





 Notsurprisinglytheyoungest(thoseage18to24)aretheleastlikelytobesavingfor
retirement.Thoseages35andolderaresignificantlymorelikelythanboththe18to24year
oldsandthe25to34yearoldstohaveanymoneysavedfor
retirement.
Aboutone‐halfofnon‐retiredrespondentsreporttheyhaveaspecificplanforhowandwheretosave
orinvesttheirmoneyforretirement,similartothe1 997findin g. Inthecurrentsurvey,alargershareof
non‐retiredrespondentsreporttheyhavecalculatedhowmuchmoneytheywill
needinretirement.In
2012,42percentofnon‐retiredrespondentssaytheyhavecalculatedhowmuchmoneythey willneed
inordertomaintaintheirstandardoflivingduringretirement,comparedwith34percentwhosaidthe
samein1997.
 Thoseclosertoretirementagearemorelikely
tohavemadethiscalculation.Fiftypercentof
non‐retiredrespondentsagesof45andolderhavecalculatedhowmuchthey’llneedtosavefor
theirretirement,comparedwith39percentofthosenon‐retiredrespondentsbetweentheages
of25and44.
Whiletheoverallshareofthosesayingthey
havesavingsorinvestmentsforretirementhasremained
aboutthesame,asignificantlylargerproportionofthosenotyetretiredsaytheyarefeelingbehindor
shouldhavealreadystartedtheirsavingforretirementthandidsoin1997(51%v.38%).
 Nearlysixin10oftheyoungest
respondents(thoseunderage25)thinktheyareinOKshapeor
canstartsavinginthefuture,farmorethananyotheragegroup.Amajorityofnon‐retired
respondentsages35to64(56%)saytheyfeelbehindorshouldhavealreadystartedsavingfor
retirement.
Decisionmakersstill
feelbehindonsavingforretirement,eventhoughlargemajoritieshaveaccessto
employer‐basedretirementsavingsplans.Overall,three‐quartersofthoseinworkinghouseholds(72%)

havesomeformofemployer‐basedsavingsofferedtothem,includinga401‐k,anemployeestock
ownershipplan,orsomeothertype
ofemployer‐base dsavings,pension,orprofitsharingplan.
Table5:SavingforRetirementbyAge
Basedonthosewhoarenotyetretired
Total 18‐24 25‐34 35‐44 45‐54 55andolder
Haveanymoney
savedforretirement   

2012 61% 35% 55% 66% 64% 71%
1997 64% 30% 63% 72% 73% 75%

16
Specifically,alargershareofdecisionmakersinworkinghouseholdshaveaccesstoa401‐korother
retirementplanatworkwheretheycanmakedirectcontributionsthandidsoin1997(67%vs.55%).
Amongfinancialdecisionmakerswithaccesstoa401‐korotherretirementplanwhere
theycanmake
contributionsthemselves,77percentreporttheydosoeveryyear,asignificantincreasefrom1997
when66percentreportedcontributingeveryyear.
Fornon‐retireddecisionmakers,themainvehicleforsavingforretirementisthroughtheemployer,far
feweraresavingontheirown.Threein
10nonretiredrespondents(31%)reportsettingmoneyaside
forretirementinaccountsorinvestmentsontheirown,and22percentreportcontributingtoanIRAon
ayearlybasis.
Alargemajorityofthosewhoarenot retiredwithmoneysavedforretirementuseseparateaccounts
(77%),ratherthanusing
oneaccountforbothretirementsavingsandfundsintendedforotherpurposes
(20%).
DuringRetirement
Threeinfiveretiredrespondents(62%)havesomemoneysavedorinvestedtopayforexpensesduring

theirretirement.In1997,asimilarsharereportedhavingmoneysavedforretirement(61%).Roughly,
onehalfof
thosewhoareretiredandhaveretirementsavingshavecalculatedhowmuchtheycan
affordtowithdrawannuallyandstillhaveenoughsavingstolasttherestoftheirlifetime(53%).In
1997,astatisticallysimilarshareofretiredrespondentsreportedmakingthiscalculation(46%).
SavingtoSendaChildto
College
Thecostofacollegeeducationhasbeenrisingwellaheadofinflationoverthepastfewdecades,making
itagreatereconomicburdenforfamilies.Inthecurrentsurvey,fewerrespondentswiththegoalof
sendingachildtocollegereporttheyhaveanysavingsforthisgoal.
In2012,48percentreporttheyhad
anyamountofmoneysavedorinvested,comparedwith56percentin1997.One‐halfofdecision
makerswiththegoalofsendingachildtocollegesaytheyfeelbehindinsavingorfeeltheyshouldhave
alreadystarted,similartotheresult
in1997.
Thirty‐onepercentofrespondentswiththegoalofsavingforachild’scollegeeducationhaveaplanfor
saving,statisticallysimilartothe36percentwhoreportedthesamein1997.
SavingandPlanningforOtherFinancialGoals
Otherfinancialgoalswereaskedaboutinthesurvey,
includingsavingforamajorpurchaseinthenext
fewyears,adownpaymentonahome,andparents’orolderrelatives’livingormedicalexpenses.A
largershareofrespondentswiththegoalofmakingamajorpurchaseinthenextfewyears,suchasa

17
carorhomeimprovementproject,haveatleastsomemoneysavedforthisgoalthandidsoin1997
(60%v.52%).Aboutoneinthreerespondentshasaplantosaveformajorexpenses,similarto1997.
Whileamajoritywiththegoalofmakingamajorpurchasearesaving,
asizableproportionsaytheyfeel
theyarebehindinsavingorshouldhavealreadystartedsaving.Thirty‐eightpercentsaytheyfeel
behindinsavingforamajorpurchase,asimilarfindingto1997.Fourin10arekeepingthesesavingsin

aseparateaccount,whilethemajority(55%)
keepsthisearmarkedmoneymixedwithmoneyforother
purposes.
One‐thirdofthosewiththegoalofbuyingahouseinnext10yearshavesomesavingsforthedown
payment(34%).Thisfindingissimilarto1997.Abouthalfoftheserespondentshopingtobuyahome
havea
planforsavingwhiletherestdonot.
Potentialhomebuyersareequallydividedonwhethertheyfeelbehindorshouldhavealreadystarted
saving(48%)orwhethertheyareontrackwiththeirsavingsorbelieveitisokaytostartsavinginthe
future(49%).Similarly,theyare
dividedonkeepingthemoneyinaseparateaccount(46%)orina
multi‐purposeaccount(51%).
Aswasobservedinthe1997survey,fewrespondentsaresavingforaparent’sorolderrelative’s
medicalexpenses(14%in2012and17%in1997).Theshareofthosewithaplanfor
thisgoalis
unchangedaswellsince1997.
Givenrisingmedicalexpenses,itisnotsurprisingthatalargershareofrespondentswiththegoalof
helpingaparentwithmedicalexpensesreporttheyfeelbehindinsavingthan didsoin1997(41%v.
32%).Respondentswhoaresaving
forthisgoalareaslikelytokeepthemone yinaseparateaccount
(53%)asamixedaccount(44%), statisticallysimilarto1997.

18
SECTION3:CREDITCARDDEBT
Similartosavingforemergenciesandretirement,reducingdebtisamajorfinancialgoalforsignificant
proportionofdecisionmakers.One‐halfofhouseholdfinancialdecisionmakersinthesurveyreport
somesortofhouseholddebt–includingcreditcardsandcollegeloansforeithertheirowncollege
educationortheir
child’s.
Forty‐sevenpercentoffinancialdecisionmakersreporttheyhavesomecreditcarddebt.Fourteen

percentofdecisionmakersreporttheircreditcarddebtislessthan$1,000,17percentreportit’s
between$1,000and$4,999,while16percentreportits$5,000ormore(seeFigure5).Forty‐three

percentofrespondentsreportthattheyhavenocreditcarddebt.

Aboutonein10decisionmakerswithatleastonecreditcardreportstheypayjusttheminimum
balancewhentheygetacreditcardbill.Forty‐fivepercentreporttheyarepayingoffthefullamountof
their
bill,and42percentsaytheypaysomethinginbetween.
Twoin10financialdecisionmakers(22%)saytheyhavedebtcarriedoverfrommonthtomonththat
theyfeelneedstobepaidofforreduced.
 Thosewithlargercreditcardbalancesaremorelikelytosaythey
havecreditcarddebtthat
needstobepaidoff.Sixty‐eightpercentofthoseowing$5,000ormoresaytheyhavedebtthat
needtobereduced,comp aredwith32percentofthosewithsmallerbalances.
Sixty‐twopercentofdecisionmakerswhofeeltheircreditcarddebtistoo
highhaveaspecificplanto
paydownthebalance,includingconsolidatingtheirdebtintoasingleloan.
Nodebt
43%
Lessthan$1,000
14%
$1,000‐$4,999
17%
$5,000ormore
16%
Nocards/No
answer
10%
Figure5:CreditCardDebt


19
 Sixty‐fourpercentofthosewhowishtoreducetheircreditcarddebtandhavebalancesof
$1,000ormoresaytheyhaveaplanforreducingthisdebt,comparedwithjust47percentof
thosewithsmallercreditcardbalances.
One‐thirdofthosefinancialdecisionmakerswiththe
goalofreducingtheircreditcarddebtsaytheyfeel
behindinreducingtheirdebtorshouldhavealreadystartedtoreducetheirdebt.Aboutone‐halfsay
theyarewheretheyshouldbeorthatit’sokaytostartinthefuture(seeFigure6).
 Thosewho
donothaveaplanforreducingtheircreditcarddebtaremorelikelythanthosewith
aplantosaytheyfeelbehindonthisgoal(45%v.29%).


Ahead
14%
Behind
36%
OK
47%
NoAnswer
3%
Figure6:ViewsonCreditCardDebt
Basedonthosewithgoalofreducingcreditcarddebt

20
SECTION4:THEIMPORTANCEOFFINANCIALPLANNING
EmergencyandRetirementPlanning
Therelationshipbetweenplanningandfinancialconfidenceisstrong.Earliersectionsofthisreport
showedarelationshipbetweenhavingaplanforaspecificfinancialgoalandone’sassessmentoftheir

progresstowardsachievingthatspecificgoal.Sixin10decisionmakers(63%)haveeitheraplan
for
theirretirementoremergencyexpenses.Thosewithaplanforeitherofthesefinancialgoalsaremore
likelytosaytheyfeelaheadontheirpr ogress towardssavingforthesespecificgoals(seeFigure7).

Thisfeelingoffinancialcomfortisbroaderthanbeingsatisfiedwithprogresstoward
thesespecific
financialgoals.Forexample,thosewithaplanforemergencyexpensesorretirementaremorelikelyto
saytheylivecomfortablythanthosewithoutaplanforeitherofthesecrucialitems.Theyarealsomore
likelytobeconfidentindealingwith financialmatters(seeTable6).

Likewise,thosewhoareplanningforeitherretirementoremergencylivingexpensesaremorelikelyto
befinanciallyprepared.Forexample,46 percentofthosewithplansineitheroftheseareasaresaving
10percentormoreoftheirincomeannually,comparedwithjust14percentofthosewho
donothavea
plan.Inaddition,alargershareofdecisionmakerswhohaveaplanforeitherretirementor
emergencieshave10monthsormorelivingexpensessaved,comparedtothosewithoutaplan.
Thoseearninglessthan$50,000seemtobenefitmostfromplanningforemergencyexpensesor

retirement.Thosewithplansattheselowerincomelevelsaremoreconfidentandincontroloftheir
financialsituation.Inaddition,largersharesofthosewithaplanaremorefinanciallypreparedforthe
futurethantheircounterparts.
12%
11%
3%
1%
0%
10%
20%
30%

40%
50%
Emergencies Retirement
Figure7:FeelAheadonSavingforSpecific 
FinancialGoal
Basedonthosewitheitherretirementoremergencypla
Plan
NoPlan

21
Table6:FinancialPreparednessbyPresenceofeitherPlanfor
SavingforEmergencyExpensesorRetirement
andAnnualIncome
 Total
Under
$25,000
$25,000‐
$49,999
$50,000‐
$99,999
 Plan
No
Plan Plan
No
Plan Plan
No
Plan Plan
No
Plan
Percentwhosaythey… 

Livecomfortably 37% 18% 15% 7% 21% 20% 40% 38%
Areconfidentinmanaging
money,savings,and
investments
89% 74% 85% 68% 88% 79% 88% 83%
Havehighfeelingof
controlovertheirfinances
41% 19% 28% 12% 28% 22% 38% 28%
Usuallypayoffwhole
amountoncreditcard
41% 22% 28% 14% 38% 20% 39% 38%
Have$100,000ormorein
savingsandinvestments
28% 5% 6% ‐‐ 14% 5% 29% 11%
Aresaving10%ormoreof
income
46% 14% 14% 9% 34% 13% 54% 24%
Have10monthsormore
ofemergencyexpenses
31% 13% 15% 5% 26% 12% 28% 20%
N’s 97
0
 538 108 254 208 11
6
 291 9
0


22
ComprehensiveFinancialPlanning

Asin1997,thecurrentsurveyclearlyshowsthebenefitsofhavingacomprehensivefinancialplanforall
decisionmakers,aplanthatincludessavingsandinvestments,planningforretirementandinsurance
needs
4
.Thecurrentsurveyfindingsdemonstratethatdecisionmakerswithacomprehensivefinancial
planaremorefinanciallyconfidentandcomfortablethanthosewithoutaplan.Inaddition,thecurrent
researchshowstheyhavemorepositivefinancialoutcomes.
Althoughcurrentandpastresultsshowtheimportanceoffinancialplanning,fewrespondentshave
ever
createdacomprehensivefinancialplan(seeFigure8).Inthecurrentsurvey,just31percentoffinancial
decisionmakers’reportthattheyhaveeverpreparedacomprehensivefinancialplanorhadone
preparedforthem.
 Thirty‐sixpercentofdecisionmakersages45andolderhaveever
preparedacomprehensive
financialplan,comparedwith24percentofyoungerrespondents.
 Thosewithhigherannualincomesaremorelikelytohaveafinancialplan.Just10percentof
thosewithincomeunder$25,000haveaplan,increasingto25percentamongthosewith
incomeof$25,000to$49,999,35
percentamongthosewithincomesof$50,000to$99,999,
and55percentofthosewithincomesof$100,000ormore.


Inthecurrentsurvey,20percentofthosewithoutafinancialplanreporttheyareveryorsomewhat
likelytohaveonepreparedinthenext12months.

4
Directcomparisonwith1997notavailable,seeAppendix‘Savers’.
Yes,HavePlan
31%
NoPlan

69%
Figure8:EverHadaComprehensiveFinancialPlan
Yes,HavePlan
NoPlan

23
 Thosewithincomesof$50,000aremorelikelythanthosewithlowerannualincomestosay
theyarelikelytodevelopafinancialplaninthenext12months(27%v.17%).
Regardlessoftheirincomelevels,decisionmakerswithacomprehensivefinancialplanhavemore
positiveandconfidentfeelings
aboutvariousfinancialmatters.Thosewithafinancialplanaremore
likelytosaythattheydonotfeelbehindonanyoftheirspecificgoals,suchassavingforemergencies,
retirement,oramajorpurchase(seeTable7).One‐halfofthosewithafinancialplansaytheyfeel
very
confidenttheyaremakingthebestchoicestomanagetheirmoney,comparedwith30percentofthose
withoutafinancialplan.
Table7:AttitudesaboutFinancialMattersbyPresenceof
ComprehensiveFinancialPlanandAnnualIncome
 Total
Under
$25,000
$25,000‐
$49,999
$50,000‐
$99,999
$100,000
ormore
 Plan
No
Plan Plan

No
Plan Plan
No
Plan Plan
No
Plan Plan
No
Plan
Percentwhosay
they…

Livecomfortably 48% 22% 23% 8% 25% 19% 50% 34% 68% 46%
Areveryconfident
inmanagingmoney,
savings,and
investments
52% 30% 65% 30% 52% 33% 48% 22% 48% 34%
Don’tfeelbehindon
anyspecificgoal
50% 32% 44% 34% 44% 29% 45% 23% 50% 35%
Havehighcomfort
levelwithfinancial
Matters
37% 26% 18% 26% 30% 28% 32% 21% 50% 29%
Havehighfeelingof
controlovertheir
finances
49% 26% 20% 16% 24% 26% 47% 30% 71% 48%
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
Thecurrentsurveyfindingsalsoindicatethatdecisionmakerswithacomprehensivefinancialplanin
placearemorelikelytobefinanciallypreparedthanthosewithoutaplaninplace.Financial
preparednesswasmeasuredinseveralways,includingmonthsofemergencyexpenses,annualsavings
rate,andoverallsavings.Thosewith
financialplansarealsomorelikelytoavoidsomefinancialpitfalls,
suchasrevolvingcreditcarddebtordeclaringbankruptcy(seeTable8).
Lookingatthespecificindicatorsoffinancialpreparedness,42percentofthosewithafinancialplan
have10monthsormoreofemergencyexpensessavedcomparedto
16percentofthosewhodonot

24
haveaplan.One‐halfofthosewithafinancialplanaresavingatleast10percentoftheirincomeevery
yearcomparedtoone‐quarterofthosewithoutafinancialplan.Thosewithafinancialplanarealso
morelikelyhaveaccumulatedasignificantamount insavings.Thirty‐sixpercent
ofthosewithafinancial
planhave$100,000ormoreinsavings,comparedwithjust12percentofthosewithout aplan.
Ingeneral,thispatternofdifferenceisobservedacrossallincomelevels.Thosewithaplanaremore
likelytobefinanciallypreparedthanthosewithoutaplan.
5
Acrossallincomecategoriesthosewitha
financialplanaremorelikelytohave10monthsormoresavedinemergencyexpenses.Likewise,this
patternisobservedwhenlookingattotalsavings.Evenforthosewithannualincomesbetween$25,000
and$49,999,planningispowerful.Twentypercentofthosein
thisincomebrackethaveaccumulated
$100,000ormorecomparedwithjustsevenpercentofthosewithoutaplan.
Therealsoindicationsthatthosewhohaveafinancialplanaremorelikelytoavoidsomefinancial
dangers,suchascreditcarddebtandbankruptcy.One‐halfofthosewithafinancialplan
saythey

usuallypayoffthefullamountwhentheygetacreditcardbill,comparedtoroughlyone‐quarterof
thosewithoutafinancialplan.Therearesignificantdifferencesacrossmostincomegroupsonthis
measure,theexceptionbeingthoseearning$50,000to$99,999annually.


5
Significantdifferencesdonotappearacrossallincome categoriesoneverymeasure.

25
Table8:FinancialPreparednessbyPresenceofComprehensiveFinancialPlan
andAnnualIncome
 Total
Under
$25,000
$25,000‐
$49,999
$50,000‐
$99,999
$100,000
ormore
 Plan
No
Plan Plan
No
Plan Plan
No
Plan Plan
No
Plan Plan
No

Plan
Percentwhosay
they…

Have10monthsor
moreofemergency
expenses
42% 16% 30% 5% 33% 17% 40% 20% 49% 36%
Havesavingsfor
emergencies
83% 54% 62% 27% 66% 57% 87% 73% 92% 87%
Havesavingsfor
retirement
92% 65% 70% 31% 81% 77% 94% 88% 100% 95%
Aresaving10%or
moreofincome
50% 27% 21% 10% 22% 27% 57% 39% 73% 60%
Have$100,000or
moreinsavingsand
investments
36% 12% 13% *less
than
1%
20% 7% 37% 19% 69% 47%
Usuallypayoffwhole
amountoncreditcard
50% 27% 41% 16% 46% 26% 45% 36% 55% 41%
Haveneverdeclared
bankruptcy
92% 87% 94% 89% 86% 83% 90% 86% 93% 85%

N’s 537 962 52 307 95 228 148 231 16
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