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July 1, 2005 — Heading into the summer, consumer credit attitudes are anything but sunny. According to the latest poll for the Experian-Gallup Personal Credit Index, Americans are worried about their ability to pay monthly bills, maintain solid credit ratings, and borrow money. These concerns drove the index down, even though consumers' debt situations remain unchanged.
Consumers are feeling gloomy about both their present and future financial outlook, causing the steep index decline. The combined Personal Credit Index has now dropped to 79, the lowest level since it was launched last March.
Many people look forward to the "golden years", but more are delaying retirement. While 40% of Americans hope to retire before 65, the majority of 53% expect to work at least that long, including 29% who expect to work longer. And recently, a greater number of people have abandoned plans to retire before age 70. Thinking back five years ago, only 15% expected to work past age 70 or never to retire at all, while this year it is 23%.
Scant retirement savings could be a factor driving these delays: as many as 48% of working Americans are not currently saving money for retirement (39% report making no monthly contributions whatsoever, while another 9% are "unsure").
However, those who do have retirement funds started saving their green well before going gray. At age 29 on average, savers began to put money away for retirement; the majority saving an average of 12% of their monthly household incomes.
Overall, 40% of Americans are worried about not having enough money to live comfortably after retirement. Women are less confident than men on the issue, with 46% of women and only 34% of men expressing worry. Not surprisingly, those most worried earn less than $40,000 per year.
Most People Expect Reduced Social Security Benefits
With recent dire warnings about the financial viability of the government's Social Security system, many Americans are skeptical that they will receive all of the benefits they would get if they retired now. Indeed, just 18% of consumers are that optimistic, though another 18% expect to get most of the benefits and 38% expect some benefits. However, among people under age 30, a full 25% expect to receive no Social Security benefits.
Overall, those polled cited their major sources of retirement income to come from:
- 401k plan — 44%
- IRAs, investments, personal savings — 39%
- Company pension — 30%
- Social security — 28%
- Money from real estate — 22%
- Part-time work while retired — 18%
- Money from business or hobby — 18%
- Inheritance — 8%
Reverse Mortgages Prove an Unpopular Option
Three out of four retired people polled are homeowners. Yet these respondents are not inclined towards reverse mortgages for additional income. Nearly 80% say they would not consider such a loan. Retired people are also unlikely to use an equity loan to pay for their medications, with just 3% having done so.
About the Experian-Gallup Personal Credit Index
The Experian-Gallup Personal Credit Index is a monthly survey among a nationally representative sample of 1,000+ respondents, focusing on consumers' ever-changing attitudes and perceptions relating to their current credit situation and future expectations. Specific areas of inquiry include debt load, credit score, borrowing, and repayment ability. The survey's margin of error is +/- 3%.
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Personal Credit Index Plummets to Five Month Low
Experian-Gallup Personal Credit Index drops 15 points since June 2005:
- Reflects Americans' growing worry over their monthly bills and creditworthiness
- Respondents with incomes below $40,000 have become sharply pessimistic
1-in-4 Future Retirees Expect to Receive No Social Security
Amount of Future Social Security Benefits Expected Among Current Non-Retirees
40% of Americans Worry They Won't Have the Money to Retire
% of Respondents "Somewhat" or "Very" Worried They Won't Be Financially Able to Retire
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