Americans have burned through their savings (2024)
A new poll for Newsweek showed that more than a fifth of Americans are without any savings, with another fifth saying that they have less than $1,000 in their bank accounts, a signal of how precarious some voters feel about their financial situation even as the U.S. economy has withstood the shocks of a high interest rate environment.
Asked "how much money do you personally hold in personal savings accounts," 22 percent answered "I don't have any savings" while another 20 percent said they had less than $1,000. Other answers revealed that 15 percent had between $1,000 to $5,000, 10 percent with savings of $5,000 to $10,000, 13 percent boasted $10,000 to $20,000 of cash in their bank accounts while 20 percent had more than $20,000.
In a sign of how precarious the economic situation was for some Americans, 23 percent of those surveyed said they only had a "few days" of savings left to finance their basic costs of living, the poll showed. The survey by Redfield & Wilton Strategies for Newsweek was carried out on January 18 with a sample size of 1,500 eligible voters in the U.S.
The poll results come amid a period of uncertainty for the U.S. economy, which has been shaped by elevated interest rates put in place by the Federal Reserve policymakers to slow down soaring inflation that at one point hit four-decade highs. For the better part of 2023, voters kept telling pollsters about their anxieties about the economy, worried that the country was headed in the wrong direction.
Inflation has slowed to 3.4 percent in December from the 9 percent peak it reached in the summer of 2022. But the hike in rates has reverberated through the economy, pushing up borrowing costs for things like homes, auto loans and business investment.
The acceleration of rates at their fastest clip since the 1980s to their current two-decade high of 5.25 to 5.5 percent was expected to slow down the economy and even plunge it into a recession and lead to mass layoffs.
But the economy has proved far more resilient than anticipated. Employers have kept hiring, wages have kept pace with inflation and some experts are projecting a soft landing, where the Fed's rate moves would help moderate inflation without doing too much damage to the jobs market. In December, Fed policymakers indicated that they were done raising rates for the foreseeable future.
"The odds of a recession have declined over the past several months because of a strong labor market, a deceleration in inflation, and looser financial conditions on the back of the impending Fed pivot to rate cuts," Oxford Economics analysts said in a note last week shared with Newsweek. "Our subjective odds of a recession this year are now less than 50 [percent]."
This shift has begun to be captured in some surveys, where some Americans are feeling a little more confident about their financial conditions compared to only a few months ago.
When it comes to the pocketbooks of Americans, Oxford Economics analysts suggest that with Americans still keeping their jobs and earning, this will buoy the economy.
"While we expect the pace of spending to slow in 2024, there are reasons to believe consumers will keep their wallets open. Strong wage gains alongside falling inflation means real wage gains will remain a support to consumption," they said.
There were risks, though, to the soft landing scenario, Oxford Economics warned.
"The key downside risks to our forecast are the potential for policy uncertainty to weigh on hiring and investment more than anticipated, sudden weakness to the supply side of the economy, and geopolitical tensions," they said.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Americans haven't been stashing money into their savings accounts like they used to, according to government statistics. That's part of the reason why consumer spending has been so robust since the economy ascended from pandemic depths, despite high inflation and elevated interest rates.
If you've got nothing saved for retirement, you're not alone. Nearly 30% of Americans have $0 saved for retirement, per recent data from personal finance website GOBankingRates. Another 33% have less than $50,000 saved.
Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding. Also, nearly one in four (22 percent) U.S. adults said they have no emergency savings.
Other answers revealed that 15 percent had between $1,000 to $5,000, 10 percent with savings of $5,000 to $10,000, 13 percent boasted $10,000 to $20,000 of cash in their bank accounts while 20 percent had more than $20,000.
Nearly half of Americans have $500 or less in their savings accounts, an amount that leaves them vulnerable to unexpected expenses, according to a GOBankingRates survey of 1,063 U.S. adults conducted in November 2023.
The saving rate fell sharply to a low of 2.7% in June 2022 as Americans struggled to keep pace with inflation, which peaked at a 40-year high of 9.1% that month. Since then, savings initially rebounded as wage growth picked up and inflation eased.
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
Dave Ramsey recently conducted a study of over 10,000 millionaires. Although some millionaires have high-paying jobs, only 31% average $100,000 per year during their careers. The keys to becoming a millionaire are spending wisely and investing consistently.
The numbers are consistently around 60%, meaning only 40% of Americans have enough savings to cover an unexpected expense without going into debt. As of January 2023, the report shows that 57% of Americans have less than $1,000 in savings.
You can still live a fulfilling life as a retiree with little to no savings. It just may look different than you originally planned. With a little pre-planning, relying on Social Security income and making lifestyle modifications—you may be able to meet your retirement needs.
“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”
The short answer is yes, $500,000 is enough for many retirees. The question is how that will work out for you. With an income source like Social Security, modes spending, and a bit of good luck, this is feasible. And when two people in your household get Social Security or pension income, it's even easier.
How much does the average household have in savings? While the median bank account balance is $8,000, according to the latest SCF data, the average — or mean — balance is actually much higher, at $62,410.
A majority, 65%, say they live paycheck to paycheck, according to CNBC and SurveyMonkey's recent Your Money International Financial Security Survey, which polled 498 U.S. adults. That's a slight increase from last year's results, which found that 58% of Americans considered themselves to be living paycheck to paycheck.
When your savings reaches $100,000, that's a milestone worth marking. In a world where 57% of Americans can't cover an unexpected $1,000 expense, having a six-figure savings account is commendable.
Americans are saving less than they were before the pandemic. Still, in a worrisome twist, families have been spending even if they don't have the money. Credit card debt has risen 22 percent since the pandemic, and more shoppers are turning to “buy now, pay later” installment plans for routine purchases.
Nearly one in four (22%) of U.S. adults have no emergency savings at all, Bankrate found—the second-lowest percentage in 13 years of polling. That's especially bad news given that most Americans would need at least six months of emergency savings to feel comfortable day-to-day.
Introduction: My name is Jeremiah Abshire, I am a outstanding, kind, clever, hilarious, curious, hilarious, outstanding person who loves writing and wants to share my knowledge and understanding with you.
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