With personal savings stuck below 5% we need help

Nest with dollar bills

The personal savings rate rose slightly to 4.6% in August, according to a new report from the U.S. Department of Commerce.

But that means Americans have set aside less than 5% of our gross income every month so far this year — a far cry from the 10% to 15% financial experts say we need to be saving.

If you're living in a paycheck-to-paycheck rut like this, an automated savings plan through your bank or retirement plan is one of the best ways to get serious about investing in yourself.

Having money regularly deducted from your paycheck or checking account takes all of the emotion and willpower out of the decision to save, according to Brian Plain, a certified financial planner in Forest Park, Ill.

"When you set your savings on autopilot, you don't have to worry about following through," Plain says, "and you'll be accomplishing something every month."

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The savings rate is one of the best ways to measure how well we're preparing for retirement in an era when pensions are going away and most of us will have only two sources of income — Social Security and our savings.

Going back to the late '50s, the average savings rate was 8.4%.

But after peaking around 12% during the early '70s, the savings rate steadily fell, reaching a low of less than 3% between 2005 and 2007.

These were the decades that responsibility for retirement was being shifted from employers to employees, the years that traditional pensions were being eliminated and replaced by 401(k) plans and Individual Retirement Accounts.

At a time we should have been saving more, we were consistently saving less.

Plain says that's because we tend to save whatever we have leftover at the end of the month.

"When you do that, there's never going to be much, if anything left," he says. "You have to pay yourself first, before you pay everyone else."

Your first place to save should be in an emergency fund with three to six months' worth of living expenses.

If your rent or mortgage, utilities, food, insurance and basic essentials run you about $3,000 per month, aim to set aside $9,000 to $18,000.

This is a big chunk of money, and you won't save it overnight.

But if you can set up a savings account, then divert $150 per month to it, you can get there in a few years.

Most banks have an option that will let you set up a "repeating transfer." It will automatically move a certain amount of money from one account to another at the frequency you desire.

You can do it once per week, biweekly, monthly, quarterly or annually. Many banks will event let you select the exact day each month.

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Lynne Strynchuk, a financial planner at Moisand Fitzgerald Tamayo in Melbourne, Fla., says the benefit of automation is that you don't even have to think about it.

She recommends starting with a comfortable contribution rate, even if it's just $50 per month. Within time, you won't even miss that money and will learn to do without it.

Once you've got a healthy emergency savings account, turn your attention to your 401(k) account at work.

Start by having enough money automatically deducted from your paycheck to take full advantage of any matching contribution your employer might offer.

If you don't have a 401(k), you can open up an IRA at an online brokerage such as E-Trade and TD Ameritrade.

Once you go through the process, set up the transfer and select some investments, you'll have a savings plan on autopilot.

"You'll want to eventually increase your [automatic deposits] over time," Strynchuk says. "Doing so and adding the benefits of compounding can really add up."

There's no reason you can't automate savings among a number of accounts.

Maybe you direct 3% of your income to a 401(k) at work and $250 per month to a personal savings account.

Your goal should be clear: Build financial security more quickly by beating our tepid national savings rate.