Kicking the spending habit is a tough task

Saving for retirement sounds easy enough, but many people view achieving financial security as a lifestyle challenge similar to quitting smoking or losing weight.

That is an unexpected finding in Allstate's fifth annual "Retirement Reality Check" survey, which measures Americans attitudes about saving for retirement.

People say it feels good to save money, and in general they consider themselves a disciplined bunch. Yet one-third of the respondents Allstate surveyed rated quitting smoking and saving for retirement as equally difficult for most people to accomplish (32 percent and 31 percent respectively). In comparison, losing weight was cited as most difficult by only 25 percent of the respondents-- a smaller group, but still a significant finding in that more people view saving for retirement as more difficult to accomplish than even this notoriously challenging lifestyle goal. Taken together, these findings shed some light on why financial security doesn't come easy to more Americans.

At the same time, nearly half the survey respondents--44 percent--acknowledged that the most effective first step to achieving success is setting a goal or having a plan in place to help them save more, quit smoking or reach a healthy weight. And nearly a third--29 percent--said getting advice from a professional would be an effective first step.

"It's incredibly valuable to have this insight," said Casey Sylla, president, Allstate Financial, a business unit of The Allstate Corporation. "We now know many people think about saving for retirement, or kicking the spending habit, in terms similar to how they view losing weight or giving up cigarettes. That creates opportunities to adopt some of the approaches, tactics and tools used by successful smoking cessation or weight loss programs. Americans now have a better roadmap for how to become successful savers."

Demographic differences

Baby Boomers and women who responded to Allstate's survey ranked stopping smoking and saving for retirement as their No. 1 challenges, and both groups rated losing weight as the second hardest goal to accomplish. A slightly higher percentage of men (33 percent) rated quitting smoking as more difficult than saving for retirement (31 percent), while more women (26 percent) than men (23 percent) rated losing weight as hardest to accomplish.

Regionally, respondents living in the West rated saving for retirement as the toughest of the three challenges (38 percent), followed by those in the Midwest (32 percent), the South (28 percent) and the Northeast (26 percent).

"One possible reason those living in the West view retirement savings as the most difficult challenge is because they tend to be more health conscious than the rest of the country," said Mathew Greenwald, Ph.D., president of Mathew Greenwald & Associates, the Washington, D.C. firm that conducted the survey for Allstate. "Many of them could be non-smokers who also are physically fit, so they've either never faced the challenges of quitting smoking or losing weight, or they've already overcome those challenges. Saving for retirement, however, is likely still a hurdle for them."

Only those living in the South ranked losing weight (31 percent) as more difficult than either saving for retirement (28 percent) or quitting smoking (26 percent), while respondents from the Northeast were the sole group to rank saving for retirement as the least difficult challenge (26 percent), ranking stopping smoking as No. 1 (32 percent) and losing weight as No. 2 (27 percent). Midwesterners said giving up cigarettes is the most difficult (37 percent), followed by saving for retirement (32 percent) and losing weight (20 percent).

All groups ranked a fourth challenge--staying fit--as far less difficult than the other three lifestyle-related challenges.

Action steps

Regardless of what respondents rated as the hardest to accomplish, they agree that the most effective first step to achieve any of those goals is to have a plan or to seek professional help. Those steps were consistent across all age, gender or regional demographics.

Other common approaches, including "will power" and "telling family or friends of your intentions," were cited by fewer than 5 percent of respondents as being effective.

"The survey results are interesting because they suggest people might want to view saving for retirement in a different way," Sylla said. "Culturally, Americans are bombarded with messages that glamorize spending, eating and even smoking. We're told how delicious food is, how hip smoking is, and how many wonderful things we can buy."

Yet, according to Sylla, "The need for instant gratification can derail sound financial preparation, just as it can interfere with a healthy lifestyle. But the good news is it's never too late to adopt good habits or get back on track."

Feeling in control

According to the Allstate survey, most Americans say it "feels good" to save money. More than 90 percent of respondents said this, regardless of age, gender, income, education or region of the country. In addition, 93 percent overall said it is "important" to save for retirement.

"People generally feel good when they are in control, and that applies to both their physical health and their financial situation," Greenwald explained. "The findings in this survey suggest that Americans might want to approach managing their fiscal health just as they would approach managing their well-being. And just as they can take steps to lose weight or quit smoking, they can take simple but effective steps to kick the spending habit and create a more secure retirement."

A number of weight-loss and smoking-cessation programs teach people successful tactics to help them break bad habits, and many of those tactics can be modified to make Americans better savers.

For example, setting a goal or having a plan--cited by 44 percent of Allstate survey respondents as an effective first step--has proven effective for people who want to lose weight. "A realistic goal, such as losing 10 percent of your body weight, is effective because it is not overwhelming. Similarly, setting a goal to set aside 5 percent or 10 percent of your income is something many people might find easy to accomplish," Sylla said.

Keeping a "spending diary" that tracks weekly expenses can also help people get control over their finances. People who successfully lose weight often write down what they eat so they can keep better track of calories. "Jotting down expenses in a notebook and tallying them at the end of each week can help Americans track whether they are over or under their budget estimates and show them where they need to cut back in order to reach their savings targets," Sylla said.

A common tactic for people who want to quit smoking is to keep cigarettes out of the house or limit the number of cigarettes they will smoke in one day. That notion can be applied to credit card use. "People who are trying to curb spending so they can put more money towards retirement can choose to keep credit cards at home, rather than in their purses or wallets, or they can carry only a card that requires them to pay off their balance each month," Greenwald added.

"Tracking spending might sound like work, but just as people learn to adopt simple steps to lose weight or stop smoking, they can learn to make small behavioral changes that will help them take more control over their finances so they can reach their retirement savings goals," Sylla said. "And those who might need direction or encouragement recognize that seeking advice from a professional is also an effective strategy."

Viewing the goal of saving more for retirement as similar to adopting a healthier lifestyle acknowledges that success not only requires effort, but also discipline. And Allstate's survey shows Americans consider themselves well equipped in this area.

The vast majority of respondents--87 percent--describe themselves as "disciplined" and 78 percent describe themselves as "good savers." The majority also say they already practice good habits: 92 percent say they frequently shop around for the best deals, 82 percent say they have a budget, stick to it and save something each pay period. In addition, 80 percent say they balance their checkbooks regularly and 67 percent say they always pay off credit cards each month.

The Allstate survey shows that Americans are generally prepared to tackle their retirement savings goals, but they might be more successful if they adopt some of the tried and true methods used to overcome other tough lifestyle challenges. "Just like fad diets, quick fixes don't work; it takes setting a plan and taking a slow, steady and disciplined approach," Sylla said. "It's never too late to eat better, stop smoking or save more. And often it's the small changes that, over time, have the biggest impact."

Allstate created the fifth annual "Retirement Reality Check" survey in conjunction with Mathew Greenwald & Associates. Using a random digit dialing methodology, Greenwald & Associates polled 1,601 people born between 1946 and 1978, with household incomes of $35,000 or more. Retirees were accepted with incomes of at least $20,000. The margin of error (at the 95 percent confidence level) for the total number of respondents in this study is +/-2.5 percent, +/-3.8 percent for information specific to Gen Xers, +/-4.5 percent for Baby Boomers