The East Valley’s population, as a whole, is doing a good job of planning and saving for the future, but there’s always room for improvement.
That’s according to A.G. Edwards’ second annual “Nest Egg Index,” which ranks the nation’s 500 top-performing communities and the 50 states based on their residents’ personal savings and investing behavior.
The index measures 12 statistical factors, such as participation in retirement savings plans, personal debt levels and homeownership, to highlight the geographic regions where people are succeeding and where they face the most difficulty in “building and nurturing their next eggs.”
Arizona is ranked 30th among the states and falls just below the national average, while Phoenix-Mesa-Scottsdale is ranked 248th and is above the national average in the index of America’s 500 top-performing metropolitan areas.
“The Midwest and Northeast regions continue to perform well in the Nest Egg Index,” said Sophie Beckmann, A.G. Edwards financial planning specialist. “Although Western regions have shown some very real improvement over last year, states on the Eastern seaboard and in the heartland are still the home of America’s best savers.”
Phoenix-Mesa-Scottsdale’s ranking shows much of the local population is doing a decent job of saving for retirement, but “we need to have more of the younger generation looking at financial planning and their future, and saving a little bit more,” said Theresa Clemmons, A.G. Edwards vice president, branch manager and financial consultant in Tempe.
“We need to look more at doing some actual financial planning, instead of just OK, what can I spend today,” she said. “There has been a lot of real estate growth and community growth, but there hasn’t been a lot of planning. We still need to make sure that people are out there teaching the younger generation how to save and what to do next.”
The highest-ranked markets tend to have more mature populations, while those ranked lower, like Phoenix-Mesa- S cottsdale, have younger populations who may not be as focused on financial planning and retirement saving, Clemmons said.
“My advice would be that everybody who is a professional and is working, and has a retirement plan at work . . . make sure they are investing in that and that they review the plans that they already have,” she said. “It will be a big eye-opener to those people who aren’t participating in company plans and who aren’t being matched (by their employer) in those plans.”
Most companies offer retirement savings vehicles, such as 401(k)s, and it’s an easy way to start preparing for retirement, Clemmons said.
Although many believe they need every penny they earn to cover current expenses, “you’d be surprised that we’re not using every penny that we have,” she said.
“You need to do a financial analysis — your debt versus your income — because there’s a lot of money out there that we spend and we think we’re living paycheck to paycheck, or we don’t have enough money to invest,” Clemmons said.
“But when you actually sit down and review this, and start writing down what are your expenses . . . even that $25 a month, people can start investing that little amount every month. That’s a dinner at most places. That’s the first place to start.”