The effect of a robust economy on Americans appears to be an increased appetite for luxury items possibly at the expense of retirement savings.
A new nationwide survey of 1,006 people, 30 to 59 years old living in households in which at least one person earns more than $40,000 per year, showed a solid level of confidence. The survey's authors, Phoenix Home Life Mutual Insurance Co., Hartford, Conn., said: "Professionally and financially, Americans are happy, not worried."
When asked to name their greatest financial concern over the next five years, the percentage of respondents who said "none" rose to 22% from 17% last year.
More Americans this year said their short-term financial goal is to make an extravagant purchase such as a car or boat -- 23%, up from 19% last year; and 24% said they have reduced or diverted retirement savings in the past three years in order to do it. When asked the reason for the reduction in retirement savings, 15% said to buy a new car, 12% said to make a major luxury purchase and 12% said to take a vacation.
But despite cutting into their savings, the survey showed that even more people expect the quality of their retirement to be better than the present. There has been a steady rise in the number of people who expect to enjoy a higher standard of living in retirement than now, to 25% from 20% in 1996.
Fewer Americans expect to inherit money -- 27%, down from 41% in 1994.
This year's survey also revealed a downward trend in the percentage who said they are "very concerned" about outliving their retirement savings. Only 8% had this concern this year, down from 13% in 1996.
The survey was conducted by telephone for Phoenix Mutual by Yankelovich Partners Inc., Norwalk, Conn. between Jan. 12 and Feb. 1. The average household income of respondents was $87,000.