Why the Improving Economy Has Done Nothing for Retirement Saving

The economy is perking up but almost no one is saving more for retirement than they did last year. Here's why.

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Despite a noticeable uptick in the economy, Americans continue to fall farther behind in their retirement savings—and pre-retirees seem to be in the direst shape.

In the last 12 months:

But while 18% of Americans are saving more than they were a year ago, 17% are saving less and 54% are saving the same, according to a survey from Bankrate. That means a net of just 1% are taking advantage of the improving economy to shore up their long-term financial independence.

Perhaps most surprising is that employed pre-retirees appear to be doing the least about it. Folks between the ages of 50 and 64 are most likely to be saving less than a year ago. Among upper middle-income households—many of who are pre-retirees—21% are saving less than a year ago, Bankrate found.

This is especially troubling because of the catch-up savings options available to people past age 50. You can contribute and extra $1,000 (total of $6,500) into an IRA and as much as an extra $5,500 (total of $23,000) in a 401(k).

Of course, you need to have the money to make extra contributions, and well-earning pre-retirees are most likely to be in a squeeze that includes carrying some of the burden of an aging parent and either a child in college or one that has boomeranged back home. Meanwhile, the job market hasn’t rebounded as strongly for this group.

“Many Americans just don’t have a lot of extra money left after paying the bills,” says Greg McBride, Bankrate senior financial analyst. “Household incomes have stagnated and that is squeezing the ability to ramp up retirement savings and spending. The inability to ramp up spending is why the economy is stuck in first gear.”

The best way to ramp up saving is to pay yourself first, McBride says. “Have the money taken directly from your paycheck before you have a chance to spend it,” he advises. Schwab recommends these 10 ways to save more. Other suggestions include dedicating a raise to savings or your monthly payment on a debt that gets paid off. As the economy continues to improve you’ll have greater flexibility to save, and you should find a way to do that before ramping up spending.