Scary American Saving Statistics That Will Freak You Out
As America continues to pull itself out of the remnants of the 2008 Recession, the average citizen’s finances are still in a slow recovery. Despite economic uncertainty, Americans still expect that idyllic dream of a comfortable retirement where decades of work finally leads to a satisfying pay-off. However, attaining that precious retirement requires a lifetime of financial dedication and longterm thinking.
The state of savings and financial security in America is a complex and fractured picture, filled with astonishment, anxiety, and glimmers of hope. Savings statistics serve to reflect not only the state of our economy, but the various ways in which average citizens interpret and internalize the financial sector. Looking at seemingly boring signifiers like bank account balances, personal savings rates, and 401(k) contributions provides a deeper look at the stratification of American society and our ability to withstand another economic downturn.
Here are 30 average American savings statistics that are sure to shock and surprise, or at the very least provide an interesting and nuanced picture of the state of our economy.
1. The number of Americans with less than $100 in savings
Inevitably, unexpected expenses occur in our lives. Whether it’s an emergency medical bill, a necessary trip to the mechanic, or a relative who desperately needs financial assistance, it’s inevitable that everyone needs some cushion money in the bank in case of emergency. Shockingly, nearly half of Americans are unable to pony up $500 at a moment’s notice. To make matters even worse, roughly 23% of Americans couldn’t even pay $100 in an emergency situation.
2. The number of Americans who experience sudden changes in wage
When planning for retirement or forecasting what debts you can afford to pay off over multiple years, it’s crucial to have an idea of what your wage might look like in the future. Someone with a comfortable salary might not have any qualms over taking on the burden of paying off a new car, but such an assumption can often be a dangerous mistake. The Pew Charitable Trust issued a report stating that nearly half of American households will undergo a change in income by 25% over the next two years. Naturally, this change can be unpredictable, shooting upwards or tumbling down. Therefore, it’s always a good idea to take caution before assuming you’ll make the same wage for years to come.
3. Credit card debt numbers look eerily similar to 2007
In 2007, financial markets in America and around the globe were on the precipice of collapse. Credit card debt was one indicator of the turmoil to come as many Americans spent recklessly with false assumptions of continued prosperity. Unfortunately, it seems as if we’re doomed to repeat our mistakes. In 2015 Americans added $71 billion in credit card debt. This staggering number hasn’t been matched since 2007 when $113 billion was added in total credit card debt. If this upward trend continues, Americans will likely outpace 2007 credit debt numbers in the coming years.
4. The number of Americans who haven’t saved for their retirement
Once you’re over the age of 50, saving for retirement quickly becomes more and more difficult for those who never started saving in the past. Unless you’re able to stash away a significant part of your income, saving so late in the game can often be too little too late. Yet 36% of adults from the ages of 50 to 64 haven’t saved anything for their retirement. That statistic should serve as a prescient reminder that it’s all too easy to procrastinate on saving for your future.
5. Credit card debt is surging
Even in the darkest days of the financial crisis, total credit card debt failed to top $1 trillion. However, we are on track to break that staggering benchmark of excess. The website WalletHub projects that the end of 2016 will mark the first time American credit card debt has surged past $1 trillion, passing the $984 billion in credit debt Americans had at the end of 2008. As of Q2 in 2016, the total credit card debt has reached $912 billion, which is expected to increase by over $80 billion when 2017 hits.
6. The personal savings rate
Investopedia defines a savings rate as “the amount of money, expressed as a percentage or ratio, that a person deducts from their disposable personal income to set aside as a nest egg or for retirement.” Sadly, the average personal savings rate in America has been on a steep decline since 2012. As of 2014, average Americans were only saving 4.4% of their incomes for retirement, a paltry number for those without six figure salaries. This is a sharp decrease from 2012, when Americans were saving an average of 10.5% of their incomes.
7. How concerned Americans are about their financial future
At first glance, rising life expectancies should seem like a point of celebration for those with cushy retirement funds. However, as retirees see their futures sprawled out before them, many fear they haven’t planned well enough to support their long lives. CPA financial planners conducted a survey to see what their clients were worried about the most, and a staggering 41% reported that running out of cash was their biggest concern. The survey found that even those with comfortable incomes and net worths still faced significant fears that their coffers would run dry into their twilight years.
8. It’s not too late to plan your retirement
Even if you are one of the late bloomers over 50 who hasn’t put a dime in their savings, all hope is not lost. There are generous 401(k) and Roth IRA contribution catch-up plans that allow you a chance to grow your nest egg before retirement hits. Those 50 and older are allowed to contribute a maximum of $24,000 to their 401(k) as opposed to the $18,000 limit for those under 50. A Roth IRA is also an excellent option to consider for those looking at a last minute emergency fund. Americans 50 and older can save a maximum of $6,500 a year in a Roth IRA, and have the option to withdraw savings at any time without a penalty.
9. The discrepancies in net worth
A person’s net worth is calculated by subtracting their combined assets from their combined liabilities. To put it in the simplest terms, Bankrate defines net worth as “what is owned minus what is owed.” This may be surprising to some and obvious to others, but net worth tends to be significantly greater among older adults. Millennials aged 18 to 34 have a paltry median net worth of $11,000. Those between the ages of 35 and 44 fare much better with a net worth of roughly $50,000. And adults between 55 and 64 years of age top them all with a median net worth totaling $165,000.
10. Number of adults without a bank account
For many, it may seem impossible to navigate life and all of its expenditures without a bank account. However, a staggering number of Americans go through life without having a formal institution to put their money in. Nearly eight out of every 100 American households don’t have a bank account. While this may seem like a minuscule number, that comes out to roughly 10 million households in total.
11. Younger generations are doing better than you’d think
As millennials starts to seem more and more like a dirty word, it’s easy to assume those in the 18 to 34 age range would be the worst savers. However, the trends show the exact opposite. Among 22 year olds, 67% have started saving up for their retirement, which spikes up even further among the 30-something crowd. Close to 76% of those aged 30-39 have started saving for their retirement.
12. The best city for saving money
Sometimes location can be one of the most important factors to consider when thinking about your savings. Cities with high median incomes and low expenses/housing prices make for the perfect places to build wealth. In 2016, Go Banking Rates rated the Phoenix suburb of Gilbert, Arizona as the best place to save your money. The city’s median income of roughly $82,000 pairs nicely with relatively modest median rents of $1,400 and median home prices at $300,000.
13. The worst city for saving money
Likewise, there are cities that could spell financial ruin for those trying to settle down and build a comfortable retirement fund. It should come as no surprise that San Francisco, California was rated as the worst city for saving money. The beautiful coastal city has garnered notoriety for its ballooning housing prices that have started to force out those with middle class salaries. San Francisco’s median income of roughly $80,000 pales in comparison to the whopping median home price of $998,000.
14. The second quarter of 2016 says some terrifying things about our credit card debt
There are a number of reasons why 2016 has been such an exceptional year for the accrument of credit card debt in America. Some could put an optimistic spin on rising debt numbers as signifiers of a booming economy filled with well-off consumers who can afford to take on debt. However, the continuing issue of wage stagnation makes the debt situation much more worrisome. In Q2 of 2016, Americans added on over $34 billion in credit card debt, which is the highest accumulation since 1986.
15. The number savers expect they need upon retirement
Calculating the exact amount of money you need to have in the bank upon retirement is a notoriously difficult task. There are a variety of factors that affect this magic number including your expenses upon retirement, your income over the coming decades, and the age your social security benefits will kick in. The median amount of money needed for retirement reported by most Americans making a middle class income is $250,000. While this may be end up being enough to maintain your current lifestyle, it’s important to check out numerous calculators that provide you with a more accurate number.
16. The number of Americans who expect never to retire
Many Americans power through the workforce with the expectation that their labor will have earned them a decent standard of living upon retirement. Sadly, a number of Americans never expect to reach retirement and plan to be in the workforce into their waning years — and that number is growing. In 2011, 2% of employees expected to stay at their job for an indefinite amount of time. This number jumped up to 7% in 2013 when employees were posed the same question.
17. The number of Americans living paycheck to paycheck
The phrase “paycheck to paycheck” typically conjures images of those working multiple jobs for long hours and low wages, struggling to keep the lights on and put food on the table. However, the real picture is much different. Approximately 38 million American households live paycheck to paycheck, spending the entirety of their wages on expenses. What’s even more startling is that two out of every three of those households have a median, middle class income totaling $41,000.
18. The effect of race on savings
It’s no secret that America is a nation struggling with a lengthy history of systemic inequality. Racial discrimination has far-reaching impacts in America, especially when it comes to economics. People of color often face a much more difficult path to saving money when compared to their white counterparts. Three-fourths of African-Americans and non-white Latino households have fewer than $10,000 in savings, while almost 66% of those households have nothing in savings.
19. The number of Americans who have six months of expenses in their savings
No matter how comfortable your living situation may be, the looming threat of unemployment is always near for reasons you could never foresee. As a result, it’s always a good idea to have money saved in the bank that could cover expenses for a few months while you seek employment. Despite the layoffs and uncertainty following the Great Recession, many Americans still haven’t planned for this scenario. Approximately 23% of American adults don’t have six months of expenses saved up in case of emergency.
20. The percentage of Americans with a three-month emergency fund
If a six month emergency fund seems unattainable, than having at least three months of expenses saved up should be a much more reasonable goal. Yet still a staggering number of Americans would be financially unprepared if they had to support themselves for just a few months. Only 17% of Americans said they had an emergency fund that could support them for three months. Given the instability of labor and life, this number should be far higher.
21. The number of Americans with no savings
Even for Americans who are unable to afford keeping themselves financially stable for a few months, it’s crucial to at least have some modicum of savings in the bank. Yet a truly disarming amount of American adults have yet to save a single penny in their bank account. Roughly 26%, that’s a little over one out of every four Americans, has zero savings for emergencies. This number is made all the more disturbing by the fact that 36% of Americans haven’t even began putting money aside for retirement.
22. The likelihood of the average American having an emergency fund
Demographics and income tend to play a large role when considering which Americans are the most likely to save. For example, age and level of education in particular play a massive role in separating those with healthy savings accounts from those who are unprepared. To put this into context, approximately 36% of those who are retired have a six-month supply of emergency money, which far outpaces the younger generations. Only 16% of those aged 18 to 29 have a similar emergency fund. When considering education levels, 10% of college graduates haven’t saved a penny whereas 36% of those with a high school diploma lack any savings.
23. The average American bank account balance
Many of these savings numbers can seem fairly dire given stagnating wages and modest economic growth, which signals sluggish opportunities for growing wealth. However, checking accounts provide one point of solace among the doom and gloom. In 2013, the average American had $4,436 in their bank account, which seems like a reasonable amount for those with middle class lifestyles.
24. The generation with the best savings rate
While Millennials and younger generations fare better with savings than you may have thought, the baby boomers still reign supreme. American adults who are 55 years old and up are, on average, the best savers. That age group maintains a savings rate of 13%, which is typically strong enough to ensure a comfortable lifestyle upon retirement.
25. The generation with the worst savings rate
Naturally, the generation that is the least effective at saving money tends to skew younger. When looking specifically at the savings rate, the situation begins to look particularly dire. On average, Americans between the ages of 18 and 35 have a negative savings rate, meaning their savings are actually decreasing year-to-year. With a savings rate averaging negative 2%, millennials are at least on the precipice of pushing their savings into the positives.
26. How much Americans are savings each month
It can often be difficult to move a significant chunk of your monthly expenses into a retirement fund that you won’t see for years or even a few decades. Surprisingly, those between the ages of 30 and 49 tend to save more on a monthly basis than those between the ages of 50 and 59. Workers in the 30-49 range put aside an impressive $200 per month, while those in the 50-59 range only set aside an average of $78 per month.
27. Some in the younger generation are saving earlier than their parents
Often times, baby boomers fear for the future financial security of their younger successors. Ballooning student debt and economic volatility can make retirement feel like a pipe dream, but sometimes these fears are overblown. When looking at the age where Americans start saving, younger generations actually fare better. The average American adult in their 60’s began saving at 35 years old, while the average 30-something started saving at the age of 25.
28. Many Americans don’t have enough saved for retirement
When looking at median retirement savings as a whole, the average American has $63,000 in the bank. This may seem like a decent number, but a Transamerica study showed that most Americans are far behind their realistic retirement savings goals. For example, those in their 30’s have an average of $45,000 saved up, when they should have $162,000, according to Transamerica’s metrics. Even older generations suffer from the same problem as those in their 60’s need $432,000 in savings when their median retirement savings are only $172,000.
29. The amount Americans contribute to their 401(k) balance
A 401(k) plan is a crucial and necessary step in accruing enough money to keep you afloat during retirement. Thankfully, approximately 97% of middle-class workers are enrolled in a 401(k) plan. However, roughly two-thirds of those workers set aside enough money to qualify for a plan where their company matches the contribution. Overall, the median 401(k) contribution amount for workers between the ages of 30 and 59 is 7%.
30. The average 401(k) balance
As retirement looms closer, a hearty 401(k) balance becomes more and more important. The funds from a 401(k) go a long way towards ensuring a retirement where your quality of life can be met through your final years. Thankfully, the average 401(k) balance among Americans seems to be at a healthy point. In 2013, the average 401(k) balance for American workers was approximately $102,000.