Banking, finance, and taxes

Saving Barely Pays Off for Americans

Paul Ausick

Published: March 14, 2016 1:40 pm

Last Updated: January 13, 2020 11:58 am

An average American saves about 5.2% of a paycheck, well above the 2006 average of 3.3%. That’s the good news.

The not-so-good news is that an average American with a disposable income of $42,350 in 2016 is likely to save an average of $2,202.02 over the course of a year. At an average savings account interest rate of 1.05%, the 12-month yield on those savings totals $23.25.

The even-worse news is savings account interest rates at some big banks are now 0.01%, which means saving $2,200 yields a massive 22 cents in interest. As the saying goes, don’t spend it all in one place.

Researchers at NerdWallet posted these data Monday morning, along with the interest rate a saver could have expected 10 years ago. In 2006, disposable income for an average American was $33,591 and the annual average savings rate was 3.3% of that income. That works out to annual interest income of $51.02, more than double the 2016 average.

NerdWallet’s banking expert Devan Goldstein said:

The average consumer isn’t doing a good enough job saving. If I can only be making 50 bucks in the best of times, then I’m not saving enough. The hope is that rates will get better, and then you will make some money, and that will be great. But you need to be saving one way or the other.

NerdWallet also offers some advice on savings and how to plan a savings strategy.