Americans aren't saving as much as they used to

The personal saving rate reflects how much money American households put away after expenses and taxes. This surplus can be stored in a checking or savings account, an individual retirement account, or an employer-sponsored 401(k) account, to name a few. However, the personal savings rate does not reflect gains on existing assets.

The Bureau of Economic Analysis, part of the Commerce Department, measures and tracks this rate monthly. Understanding this figure sheds light on the financial health of individual households and the US economy.

The most recent figure, from September 2023, shows that, on average, Americans are saving 3.4% of their monthly income.

Why does the personal saving rate matter?

The US personal saving rate is at an all-time low, raising concerns from policymakers and economists about Americans' ability to handle financial emergencies, according to a 2001 report from the Government Accountability Office. For example, households may have difficulty weathering an economic downturn or a prolonged government shutdown if they have limited savings.

The report also notes that a low saving rate could signal that Americans aren’t saving enough for their retirements, which could be an issue as concerns rise over the sustainability of Social Security. As the number of older Americans outpaces the number of younger ones, more people will draw upon this benefit than the number of workers available to replenish it. If Social Security payments were to decrease, retirees may need to rely on other forms of income.

How has the saving rate changed over time?

The personal saving rate in the 1960s and 1970s was relatively steady, averaging 11.2% in the ’60s and 12.2% in the ’70s. The rate began to decline in the 1980s, averaging 9.8% that decade.

In the 1990s, it fell further, to 7.2%. By the 2000s, the decade that weathered the Great Recession, the rate had fallen to 4.2%, dipping to an average of 2.5% in 2007 right before the recession.

In the 2010s, the saving rate rebounded slightly to 6.2%. So far this decade, the rate has averaged 9%, which includes several months during the pandemic when the rate was above 15%.

Saving during the COVID-19 pandemic

The personal savings rate jumped to 32% in April 2020, just as many states were under stay-at-home orders due to the COVID-19 pandemic. This rate was abnormally high, reflecting reduced spending and the start of relief payments from the federal government.

Recent saving

By January 2022, the saving rate fell below 5% and has averaged around 3.9% since—the lowest saving rate since the Great Recession.

For more information on household income and wealth, check out the America in Facts 2023 report, and sign up for our newsletter.