Residents of Florida and California are the least likely to contribute to retirement savings
No surprise, Americans are putting off saving for retirement in lieu of more living in the moment—a tempting but potentially costly mistake (in more ways than one).
More people are enrolled in credit card rewards than are contributing to 401ks or other retirement savings accounts, according to a recent report by Value Penguin.
Examining data collected by Claritas Financial, Value Penguin discovered 61 percent of U.S. households participate in at least one credit card rewards program, while just 58 percent use any type of retirement savings vehicle.
The report pointed to instant gratification as a potential reason that consumers behave this way.
For one, there’s the aggressive nature and invasive prevalence of financial institutions’ credit card marketing efforts. Value Penguin pointed to research by EMI Strategic Marketing, noting several top credit card issuers in America spend upwards of a billion dollars per year on advertising.
Plus, retirement accounts require participants to give up part of their income now in order to enjoy the financial benefit of doing so later—sometimes decades down the line. In contrast, many credit cards are free or low-cost. And for those who pay off their balance each month, rewards programs are seemingly offering something for nothing—right now.
The report assessed data from the 100 most populated cities in the country. Other key findings by Value Penguin include:
- Miami had the lowest retirement savings rate. Only 39 percent of households have a retirement savings plan.
- Eight out of the 10 worst-performing cities were from either Florida or California.
- Arlington, Va. had the highest retirement savings participation, with 70 percent of residents contributing.
- Just 10 cities save more in retirement plans than use credit card rewards: Oklahoma City; Tulsa, Okla.; Indianapolis; Plano, Texas; Lincoln, Neb.; Louisville/Jefferson, Ky.; Omaha, Neb.; Fort Wayne, Ind.; Little Rock, Ark.; and Des Moines, Iowa.