The Marietta Daily Journal
By: Leo Hohmann
May 6, 2013
Writer Leo Hohmann recently sat down with Jay Gratwick, executive vice president of Delta Community Credit Union. Our topic today is the historically low savings rate among U.S., and particularly Georgia households, and what can be done to reverse that trend in a difficult economy.
Tell me a little about your background.
I'm executive vice president and chief financial officer of Delta Community Credit Union. We are the largest credit union in Georgia, 23rd largest in the country. We have 250,000 members with $4.5 billion in assets, having started in 1940 with employees of Delta Air Lines. I've been with Delta Community 21 years in May. I spent the first eight years in the internal audit department and the rest of the time in finance. Originally I'm from Alabama but have lived in Marietta since 1995. My wife was raised here. We have two daughters, ages 11 and 14.
How does Cobb County fit into the mix with your credit union?
Back in 2007, shortly after Delta filed bankruptcy, we expanded our membership to 11 metro counties, including Cobb. And Cobb is actually our third largest county now in terms of number of members with around 10,000 members. We have three branches in Cobb: at 3250 Riverwood Parkway in Vinings; at 2627 Dallas Highway in Marietta, and at 1205 Johnson Ferry Road, Marietta. Between those three branches, we employ about 120 people here.
The topic I wanted to focus on is saving. What in your opinion prevents most people from saving enough for their retirement?
I think what's going on right now, we're coming out of the recession, so that's having a huge impact on people's ability to save. A lot of consumers are living off their savings, they either lost their jobs or their salaries have been flat and they're having to dip into savings. But also part of it is a generational difference. The younger savers are so accustomed to having debt pushed into their faces. Going to shop at almost any store, that's all they hear. Sign up for this or that credit program!
The Corporation for Enterprise Development did a study that shows more than half of Americans have no rainy day fund. Speak to that if you will. How does Georgia rate on the nationwide scale of savings rates?
The CFED does a lot of analysis of lower income demographics. They score all the states and Georgia ranks pretty much at the bottom, so the poverty rate in Georgia is lower than the U.S. average. When it comes to savings, only 61 percent of households have a savings account, and 39 percent do not. It's 69 percent nationwide who have savings accounts, so that puts us 44th among the 50 states.
What are you doing to combat that trend locally?
We're doing several things to try to really go after the younger demographic, such as the Sandy Savers Club for the young kids, which makes saving money fun for them. And a new program called Quarter Life targets young adults, ages 18 to 35. They're in that point in their life where they're either saving for a car or house or retirement. We provide savings calculators and things that will help them reach their goals, like direct deposit right to their savings account, and other products. It's important to get into those habits starting when they're young. Otherwise they'll be in the habit of taking on more debt.
What if a person is say, 35, 40 or 45 years old and doesn't have any savings, either because of a health problem or job loss or just bad spending habits? What would you say to them going forward? Is it too late for them?
No, it's not too late. And there are resources out there to help them. We have the Balance Financial Fitness program, which is available for credit unions to partner with, it's staff trained to help consumers budget, set goals for savings, retirement and that sort of thing. We partner with them for that education. Someone who's older, in their 30s, 40s, 50s, they need that discipline, that help. And it all starts with making a budget and figuring out where your money is going and tracking it each month on how you're going toward these goals. We're here to enable the financial well-being of our members. We want to make sure they're in a better position when they come to us than they were before.
I've recently seen a study about what types of jobs are the most prevalent in America. No. 1 on the list was retail sales. Most of those folks never make more than around $8 to $10 an hour unless they work their way up to a management position. Is it possible for someone to save enough and live a middle class lifestyle if they work in a low-paying service sector job like that?
I think it is possible. That consumer has to be very disciplined. It's usually a two-income earner family having to work together to make ends meet. But I especially think, especially in our local economy, that there is affordable housing that meets the needs of those folks. But, it all goes back to having that discipline to manage that budget to set aside a little bit every month. As far as other things, like college for their kids, that's tough, too. But there are other options, financial grants and aid, if you really want to do it, and are disciplined, you can.
What can parents do to help their children get into the savings mindset?
That goes back to what we were talking about. Kids are not going to figure it out themselves, they're needing their parents to help figure out what it means. It starts with a piggy bank. I have two girls, and they've had an account since they were toddlers, and any time they have a birthday or get any money, they put it in their account and we show them the receipt and they get excited about that and watching it grow. They don't want to touch that money. They get to the point where they get to see, wow, I've got to $1,000, and what that's worth (in buying potential).
So it is going to be easier to plan for retirement if you start younger. But somehow youth slips through the cracks. Does today's technology play any role?
Yes, especially with the younger generation, and that role is to make it fun. You can make it interesting enough for them, because of the Internet, for this generation, they're so in touch with the Internet, they have opportunities to go online and touch these resources that make it fun to save. When I was growing up, you didn't have these resources to make it exciting. Savings and banking, that was pretty boring stuff.