This is a sad reality in the United States today since a large number of the population has very little money set aside for any sort of contingency or retirement. Various polls and studies have endeavored to determine the actual number of individuals in America with poor savings. These outcomes depict the future as an existence where most people struggle to make ends meet every month without an emergency fund.
According to a 2019 survey conducted on Americans by GoBankingRates, 69% of people had less than a thousand dollars in their savings account. This comprised close to 20% who had no savings at all and 15 percent who had less than $10. Moreover, Millennials did not differ from other age groups when it came to the surveyed products. Yet, the least financially secure were the oldest group of consumers above 55 years with their low savings rate being slightly lower than the overall average. However, 33 percent of the baby boom generation had less than one thousand dollars, which is the minimum amount required for emergency expenses.
In another survey published in 2019, the finance website Magnify Money used Federal Reserve data to estimate that half of the US households have a modest or low level of retirement savings. Surveys showed that median retirement savings for Americans between 56 and 61 years old was a meager $21,000 – well below projections.
The economic effects of COVID-19 heightened focus on the fact that a majority of American adults lack emergency funds and retirement savings. A Harris Poll conducted in April 2020 revealed that 64% of respondents in America lack the cash to bear an emergency $1,000 expenditure. And that was only in the period that has taken weeks of pandemic lockdowns which led to unemployment figures that were last witnessed during the great depression.
It is essential to ask why Americans often have poor savings and cannot save enough money to cover an emergency or their retirement years. There are likely several contributing factors: There are likely several contributing factors:
Stagnant Wages
The overall economy of the United States has expanded significantly over the last few decades, but for middle and low-income workers, their real wages have been stagnant since the 1970s meaning that despite increasing quantities of goods and services being produced in the economy, workers have not benefitted from this growth. This makes saving money out of monthly paychecks difficult for the individuals in question.
Rising Living Costs
On the same account, the prices of large essential needs such as shelter, health care, and education have increased at a rate slower than wages in the United States This further reduces discretionary income that would have been saved.
Debt Payments
As for real wages, they have remained almost flat, which makes Americans run to credit cards and loans to cover all their expenses. According to the US Federal Reserve data, household debt stood at $14.3 trillion in 2019 recording a new high. Higher student loans among the Millennial generation are also preventing the accumulation of savings as well.
Lack of Saving Habit
Saving money is a habit that most Americans find very hard to cultivate, although it is something we can practice regularly. It could be due to some economic difficulty or maybe just not prioritizing saving, thus having little or no money saved for later.
The current retirement savings situation paints a bleak picture for the next generation of older Americans and this is because. Modern young Americans still have considerable barriers to accumulating adequate cushions as well as long-term retirement security. Society is worse off when individuals do not save and it calls for policy interventions to encourage saving and make saving possible regardless of the income level. Otherwise, many other Americans will also suffer from money difficulties, not only in the present phase of their life but also in their pensioner stage.
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