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At 645, the March 2007 Nest Egg Score—released
today by A.G. Edwards (NYSE:AGE)—increased
eight points since December 2006 and shows that opportunities for
building personal wealth are the best since this time last year.
Despite this positive wealth-building environment, the A.G. Edwards Nest
Egg Score Survey found that 31 percent of U.S. adults have not done
anything within the past 12 months toward building their personal
savings, even though 67 percent of adults believe personal choices have
a greater impact on their ability to build personal savings. One-third
of adults (33 percent) believe external factors such as their economy
have a greater influence on their ability to build personal savings.
“The Nest Egg Score’s
improvement this quarter is partially driven by continued low
unemployment and moderate inflation due primarily to declining energy
prices," said Gary Thayer, A.G. Edwards’
chief economist. “While these economic factors
contribute to an improved environment for building savings, it is also
important for people to understand that personal choices are just as
important—if not more so. It is vital for
Americans to take advantage of this favorable economic climate and take
positive steps toward boosting their savings—even
if it is as simple as putting aside a portion of their tax refund or
increasing participation in a retirement plan.”
The A.G. Edwards Nest Egg Score is a proprietary analysis of 12 factors
that influence the ability of adults to build wealth, and it includes
such government measures as the savings rate, wealth-to-income ratio,
the cost of living and the home equity rate, along with proprietary
research that evaluates Americans’ saving and
investing behaviors. Quarterly data for each factor is evaluated and
scored on the following scale: 450 to 549—poor;
550 to 649—fair; 650 to 749—good;
and 750 to 850—excellent. According to data
used to calculate the March 2007 A.G. Edwards Nest Egg Score, several
factors contributed to the increase:
The wealth-to-income ratio rose to its highest level during a
five-year comparison period.
A cost of living decline also helped boost the Nest Egg Score.
The unemployment rate remained at a five-year low.
To gain insight into the savings and investing behaviors of Americans,
A.G. Edwards commissioned the March 2007 Nest Egg Score Survey,
conducted by Harris Interactive®.
The survey was conducted during the week of February 12, 2007 among a
sample of 2,405 U.S. adults age 18 and over.
The $75,000 Question
The A.G. Edwards Nest Egg Score Survey indicated a relationship between
household income and a likelihood to actively take steps toward building
personal savings. Seven out of 10 adults with a household income of
$75,000 a year or more (70 percent), reported having taken steps to
build their personal savings within the past 12 months. They were more
likely to have opened a savings and/or investment account, as well as
more likely to have met with a financial advisor and/or decided against
making a discretionary purchase than their counterparts earning less
than $35,000 a year. The following table offers a comparison of saving,
investing and spending behaviors across four different annual household
income levels:
Saving and Investing Action
(within the past
12 months)
$75,000+ annual household income
$50,000-$74,999 annual household income
$35,000-$49,999 annual household income
Less than $35,000 annual household income
Took any step to build personal savings
70 percent
68 percent
62 percent
51 percent
Decided against making a discretionary purchase
28 percent
27 percent
23 percent
14 percent
Opened a savings or investment account
19 percent
12 percent
16 percent
11 percent
Met with a financial advisor
14 percent
11 percent
8 percent
4 percent
(a) Percentages may not total 100 percent due to weighting, rounding,
and/or the acceptance of multiple responses.
“Taking an active role in securing your
financial future is imperative,” said A.G.
Edwards Financial Planning Specialist Sophie Beckmann. “While
opening a savings account and reducing debt are good first steps,
investors should also consider boosting contributions to their
retirement plan and meeting with a financial advisor.”
Boomers Perceived As Best At Saving
The A.G. Edwards Nest Egg Score Survey also examined generational
attitudes regarding influences on people’s
ability to increase personal savings. For the purpose of the study,
generations were defined as “Mature Adults”
born before 1946, “Baby Boomers”
born between 1946 and 1964, “Gen X”
born between 1965 and 1978 and “Gen Y”
born in 1979 and after.
When asked which generation of adults is best able to build personal
savings, 26 percent of all adults said Baby Boomers, followed by 19
percent who selected Mature Adults. When asked why they think Baby
Boomers are best able to build personal savings, here’s
what all U.S. adults said:
42 percent attributed Boomers’ saving
success to higher salaries.
31 percent said Boomers are more educated about personal finance
management.
30 percent said Boomers have more retirement support through employer-
and government-sponsored programs.
29 percent identified Boomers as more fiscally conservative than other
generations.
24 percent said Boomers have access to a wider variety of savings and
investment vehicles.
Saving At Every Stage Of Life
The March Nest Egg Score Survey also suggests that good savings and
investing habits seem to kick in when someone lands that all-important
first job as an adult. In fact, of adults who have personal savings,
more than one-third (35 percent) cited employment-related events—such
as their first job (20 percent) or a change in employment such as a
promotion or new job (16 percent)—as the
primary factors that prompted their decision to start building savings.
Other milestones noted:
24 percent of adults were inspired to start building personal savings
due to marriage, separation, divorce or getting engaged.
23 percent of adults were encouraged by their parents to start saving,
but only 57 percent of all adults reported having any type of
personal savings.
“People are at a significant advantage the
earlier they start building their nest eggs,”
said Beckmann. “As our research suggests,
some older adults may have waited until they secured their first job or
got married before they started thinking about building their personal
savings, but if these same adults encourage kids to start saving early,
children will be in a much better position in the long run.”
Beckmann points out that if a 25-year-old invested $50 per month into a
tax-deferred account, by the time he or she turns 65, the account would
be worth more than $175,000, assuming an 8 percent annual rate of
return. If they started saving the same amount at age 15, assuming the
same 8 percent rate of return, the account would be worth $400,000 at
65.(b)
(b) Example is for illustrative purposes only and does not reflect
the performance of any specific investment.
What’s Your Score? Visit Nesteggscore.com
To help people determine their personal Nest Egg Score, A.G. Edwards
offers the Nest Egg Score Estimator. The Nest Egg Score Estimator asks a
variety of questions including length of employment at current job,
annual household income, investment preferences, risk tolerance, home
equity and discretionary spending habits. It also takes into
consideration age, marital status and where someone lives. To find out
how your savings and investing habits rate in relation to the rest of
the country, please visit nesteggscore.com.
About the Nest Egg Score
The A.G. Edwards Nest Egg Score is a single, quarterly, three-digit
numerical rating that represents a measure of the relative strength or
weakness of Americans’ wealth-building
performance, similar to the scoring systems used to evaluate
creditworthiness. A high Nest Egg Score indicates that households are
having more success in building their nest eggs or that economic
conditions are favorable for saving and investing. Conversely, a low
score means that households are not taking advantage of opportunities to
build their nest eggs or that economic conditions are not conducive to
wealth accumulation.
To create the Nest Egg Score, A.G. Edwards takes into account 12
statistical factors gathered from federal government data and
proprietary research conducted for A.G. Edwards by Harris Interactive®
that pertain to building wealth. Quarterly data for each factor is
evaluated and scored on the following scale: 450 to 549—poor;
550 to 649—fair; 650 to 749—good;
and 750 to 850—excellent. The 12 individual
factors are then combined and weighted to determine the A.G. Edwards
Nest Egg Score.
For further information on the A.G. Edwards Nest Egg Score, go to nesteggscore.com.
Nest Egg Score Survey Methodology
The five quarterly Nest Egg Score surveys were conducted online by
Harris Interactive®
on behalf of A.G. Edwards among a nationwide sample of U.S. adults aged
18 and over within the United States as follows: between Feb. 13 and
Feb. 15, 2007 among 2,405 adults; between Nov. 17 and Nov. 21, 2006
among 2,323 adults; between Aug. 23 and Aug. 25, 2006 among 2,295
adults; between May 23 and May 25, 2006 among 2,197 adults; and between
March 14 and March 16, 2006 among 2,182 adults. Figures for region, age
within gender, education, household income and race/ethnicity were
weighted where necessary to bring them into line with their actual
proportions in the population. Propensity score weighting was also used
to adjust for respondents’ propensity to be
online.
With a pure probability sample of these sizes one could say with a 95
percent probability that the overall results have a sampling error of
+/- 3 percentage points. Sampling error for data based on sub-samples
may be higher and may vary. However that does not take other sources of
error into account. This online survey is not based on a probability
sample and therefore no theoretical sampling error can be calculated.
Harris Interactive®
is responsible for fielding the online surveys on behalf of A.G.
Edwards. A.G. Edwards is responsible for the compilation of data from
other sources and for computing the Nest Egg Score and the results
reported.
About A.G. Edwards & Sons, Inc.
Drawn to the firm’s client-first philosophy,
individuals and businesses have turned to A.G. Edwards for sound advice
and access to a wide array of investment products and services that can
help them meet their financial goals and objectives. Founded in 1887,
A.G. Edwards and its affiliates employ nearly 6,700 financial
consultants in more than 740 offices nationwide and two European
locations in London and Geneva. More information can be found on agedwards.com.
How A.G. Edwards Does Business
A.G. Edwards generally acts as a broker-dealer but may act as an
investment advisor on designated accounts, and the firm’s
obligations will vary with the role it plays. When working with clients,
the firm generally acts as a broker-dealer unless specifically indicated
in writing. To better understand the differences between brokerage and
advisory services, please consult “Important
Information About Your Relationship With A.G. Edwards”
on agedwards.com/disclosures.
About Harris Interactive®
Harris Interactive®
is the 12th largest and fastest-growing market
research firm in the world. The company provides innovative research,
insights and strategic advice to help its clients make more confident
decisions which lead to measurable and enduring improvements in
performance. Harris Interactive®
is widely known for The Harris Poll, one of the longest running,
independent opinion polls and for pioneering online market research
methods. The company has built what it believes to be the world’s
largest panel of survey respondents, the Harris Poll Online. Harris
Interactive serves clients worldwide through its United States, Europe
and Asia offices, its wholly-owned subsidiary Novatris in France and
through a global network of independent market research firms. The
service bureau, HISB, provides its market research industry clients with
mixed-mode data collection, panel development services as well as
syndicated and tracking research consultation. More information about
Harris Interactive®
may be obtained at harrisinteractive.com.