Economic climate presents wealth-building opportunities

The survey also found that 67 percent of adults believe personal

choices have the greatest impact on their ability to build personal savings. Also, 33 percent of survey respondents believe external factors such as the economy have a greater influence on their ability to build personal savings, which may explain why a full 31 percent took no action toward building their savings in the last 12 months.

Savings snapshot

Compiled from a proprietary analysis of 12 factors, including government data and proprietary research, the quarterly Nest Egg Score is intended to show how well Americans are doing at saving and investing.

The March 2007 Nest Egg Score of 645 shows an eight-point increase from the December 2006 score. Several factors contributed to the score’s improvement, including continued low unemployment and moderate inflation due primarily to declining energy prices.

Rather than take heart in the fact that the Nest Egg Score is improving, investors need to take action and make improvements in their saving behaviors so they can take advantage of the favorable economic climate.

Good position

Nest Egg Survey data sheds light on why the current economic environment is favorable for saving.

One factor is the wealth-to-income ratio, which rose to its highest level in a five-year comparison period. A cost-of-living decline helped, as did the fact that the unemployment rate remained at a five-year low.

All of these factors should put Americans in a good position to do something about their savings.

Simple savings

Even simple steps can get people back on track when it comes to their personal savings.

Though tax-refund time has passed for most taxpayers, tax refunds provide a practical example. Setting aside a portion of that money for savings is one choice that could put people in the right direction in terms of savings.

There are, however, other slight adjustments to savings habits that could lead to potential long-term benefits.

Employees who participate in company-sponsored retirement plans should consider regularly increasing the percentage that they contribute to the plans.

Those who don’t participate in company-sponsored plans could open individual retirement plans and make regular contributions.

Start young

In addition to getting their own savings in gear, adults also should work to help younger generations establish good saving habits.

Nest Egg Score Survey research suggests that some older adults waited until they secured their first job or got married before they started thinking about building their own personal savings.

But if these same adults encourage kids to start saving at an earlier age, those children will be much better off in the long run.

To illustrate: If a 25-year-old invested $50 a month in a tax-deferred account, by the time that individual reached 65 years of age, that amount would be worth more than $175,000, assuming an 8 percent annual rate.

But if the same individual were to start saving the same amount at age 15, assuming the same interest rate, the account would be worth $400,000 at age 65.

Keep in mind, however, that this hypothetical example is not representative of any specific product. The effects of taxes and commissions were not included in the example, but they would lower the end results.

For information about the Nest Egg Score Survey, or to calculate your own Nest Egg Score, visit www.nesteggscore.com.

Timothy M. Reese is senior vice president-investments with A.G. Edwards & Sons Inc. in Springfield. He may be reached at timothy.reese@agedwards.com.[[In-content Ad]]