Middle-class consumers are saving much less now than they were just a few months ago, according to the latest First Command Financial Behaviors Index.
Consumers are putting away an average $1,436 per month in savings and retirement funds, down 28% from the summer.
Troubling for advisors, the biggest dollar decline is in retirement savings, which fell by just under one-third to $541 per month. Short-term savings dipped 20% to $677 and long-term savings sank 39% to $218, the trend firm said.
The drop in savings isn’t a result of the holiday season. “Half of middle-class consumers believe the U.S. has moved into a double-dip recession,” said Scott Spiker, CEO of First Command Financial Services, in a statement. “Families have been attempting to shore up their finances by redoubling efforts to embrace frugal living… three out of four say they plan to cut back on holiday spending.”
However, a predictive sub-index that runs as part of the survey suggests that this drop in savings will be short lived—saving money is a hot trend right now and most consumers are likely to follow it, in the coming months at least. “The withering amount of money being placed in savings may be psychologically spurring Americans to take action,” Spiker said. “Time will tell if these intentions to save more and cut debt turn into positive action.”