SAN FRANCISCO, March 10, 2016 /PRNewswire/ -- 60% of Americans say they are unprepared for a bear market, noting they haven't taken any precautionary steps for a potential economic downturn. To help people identify new ways to save for retirement and change problematic spending behaviors before it's too late, Personal Capital, the leading online financial advisory firm, has issued its inaugural Spend Report. The report identifies how Americans are currently spending and saving, specifically examining spend that contributes to the everyday cost of living, such as food, clothes and transportation. The data suggests that when Americans spend, convenience outweighs the cost.
"We're experiencing a volatile market that is out of our control, but our incremental day-to-day spending is something we do have control over. And more importantly, daily spending habits have a real impact on the amount of money we need to retire," said Bill Harris, CEO of Personal Capital. "Our goal is to help more Americans understand how small, repeat spending decisions affect their financial standing down the road. Whether it's the choice to shop at Costco over Whole Foods, or the decision to prioritize spending on hobbies over saving for retirement, it all adds up."
Data Driving Insights
By looking at spending at merchants and within categories, against demographics like age, the report shows how much Americans spend to maintain their own cost of living. Additionally, Personal Capital analyzed spending behavior regionally and identified that customers in 42 out of 50 states are prioritizing retirement contributions over other expenses.
"Our findings show that Americans are spending - feeling confident both in the economy and in their own financial standing," said Bill Harris. "The data also suggests that people are saving for their retirement -- in 42 out of 50 US states retirement savings actually trump all other expenses. While that is undoubtedly a good thing, many people's spending rate today is not going to allow them to achieve the retirement they dream of in the future. Imagine that you want to have $100,000 at your disposal each year in retirement, for example. Your spending choices right now will need to enable you to tuck away approximately $2 million dollars by the day you retire. Awareness of these figures is key, and we aim to help more Americans really understand how spending, saving and investing add up when it comes to retirement."
High-level takeaways from the report reveal:
- Restaurant spending is on the rise. Americans aren't holding on to their purse strings when it comes to dining out. In fact, people eat out for dinner roughly 14 times per month, with 20-30 year olds spending 60% of their food budget on restaurants, more than any other age group.
- Simple costs add up. America runs on Starbucks - people visit the chain more frequently than other coffee giants throughout the year and spend on average 137% more per transaction than at competitors like Dunkin' Donuts and 129% more per transaction than at Peet's Coffee. At Starbucks people spend an average of $17.73 dollars per month, vs. $6.20 at Dunkin' Donuts, $5.41 at Peet's and $5.80 at Caribou.
- Convenience trumps cost. People use ride-sharing apps more frequently than Yellow cabs, specifically requesting Lyft rides 5 times more than Yellow cabs, and Uber rides 7 times more than Yellow cabs on average.
- Buying in bulk beats gourmet grocers. When it comes to everyday grocery shopping, Americans frequent Kroger the most, over twice a month. Yet they spend the most at Costco, averaging $151.71 per month – that's roughly 50% more than they spend at Kroger and two times more at Safeway, Trader Joe's and Whole Foods.
- Wallets are open at the mall. For an average shopping trip, Americans spend bigger bucks at Bloomingdales than other top clothing retailers – averaging $206.95 each shopping trip compared to Sears ($171.38), Nordstrom ($149.06) or Macy's ($106.47). People's monthly spend at Nordstrom is $83, while monthly spend at Bloomingdale's and Macy's are $77 and $42 respectively.
For a deeper dive into how Americans are spending, and to see what each state spends or saves the most on, click here:
The State of Spending Trends
The State of Spending Map
To see where your state stacks up on retirement savings, visit: https://www.personalcapital.com/retirement-readiness-map.
To find out if you will be ready for retirement, visit: https://www.personalcapital.com/financial-software/retirement-planner.
To obtain this data, Personal Capital analyzed the banks accounts of dashboard users for spending trends on a completely anonymized basis. Spending patterns were calculated across 148,225,107 transactions in total. All of these transactions occurred in 2015. Most of the data is comprised of simple sums and counts. Categories for spend were gleaned from our transaction service provider. Geo regions were based on ip logins to our site. Generations are defined as: Baby Boomers, year of birth between 1943 and 1964; Generation X, year of birth between 1965 and 1979; Millennials, year of birth between 1980 and 2000.
About Personal Capital
Personal Capital is a next generation financial advisor. The company melds technology with professional advisors to help households manage their wealth. Personal Capital's free app is available for iPhone, iPad and Android.
Disclaimer: Personal Capital Advisors is an SEC registered investment advisor. Any reference to the advisory services refers to Personal Capital Advisors. SEC registration does not imply a certain level of skill or training.
Marianne Ahlmann | Personal Capital | [email protected]
SOURCE Personal Capital