Survey Shows
Introduction
Americans are struggling to save for basic emergencies, let alone retirement. A recent survey found that a majority of Americans don’t have enough to cover a basic emergency expense. Fifty-five percent said they did not have $500 in cash for an emergency. The survey of 1200 U.S. consumers between the ages of 18 and 75 was conducted by Qualtrics on behalf of Varo Money in 2018. The results showed that people of all ages are squeezed when it comes to saving. Here’s a breakdown of the results.
Most Americans Have Nothing Saved
Six in 10 millennials don’t have $500 to cover an emergency expense. One in five millennials currently receives monthly financial assistance from relatives, and more than half don’t have a comprehensive financial plan. Nearly half of all respondents — 49% — said they saved less than 5% of their income, and a quarter said they are saving nothing at all. On the bright side, a small group of respondents (4%) were super-savers, putting away at least 25% of their income.
Image Description: Graph showing savings statistics among different age groups.
National Savings Trends
The national saving rate is around 6%, according to Federal Reserve data. This is a substantial dip from 10% in the 1970s. Financial experts recommend that people save at least 10% to 15% of their income across cash and retirement savings goals. Several factors contribute to the savings crunch, such as higher costs of living and rising student loan debt.
Image Description: Chart showing the national saving rate over the decades.
Are Savings Accounts the Missing Link?
Almost half of the respondents reported they don’t have a savings account. Among those who do, nearly one-third said they didn’t know the annual percentage yield (APY) for their account. Of those who did know their APY, 56% said they are getting less than 1.00%. The national average APY on a savings account is 0.09%, according to the FDIC.
Image Description: Infographic showing the prevalence and APYs of savings accounts among respondents.
Expectations vs. Reality
Despite the dire savings situation, many Americans still have optimistic retirement plans. Most respondents said they plan to retire by 60 and expect to live into their 80s and 90s. However, more than one-third of millennials without $500 in emergency cash still plan to retire by 60, and nearly a third assume they’ll be living on $100,000 a year when they do retire. This disparity highlights a concerning trend.
Image Description: Graph comparing retirement expectations with financial realities.
Tech is Making it Easier
Technology is already helping Americans save. Four out of ten people say they haven’t set foot in a bank in the last six months thanks to online banks and apps. Meanwhile, 69% of people said tech has made it easier or the same to manage their finances.
Image Description: Infographic showing how technology helps in managing finances.
Conclusion
Americans are living longer and need more money to last through retirement. It’s essential to start saving early and take advantage of financial tools and resources available. To help you get financially ready, consider creating a comprehensive financial plan, opening a high-interest savings account, and using technology to manage your finances effectively.