Yet another study finds that a majority of Americans are on financially insecure footing
Sixty-two percent of Americans have inadequate savings.
That alarming statistic was the main finding of a Google Consumer Survey that GoBankingRates, a national website that tracks interest rates, recently conducted. Among the survey’s 5,006 respondents, 28 percent stated they have no money in their savings account, while 13 percent had less than $1,000 and 21 percent lacked a savings account entirely.
“It’s worrisome that such a large percentage of Americans have so little set aside in a savings account,” said Cameron Huddleston, a personal finance expert and columnist for GoBankingRates. “It suggests that they likely do not have cash reserves to cover an emergency and will have to rely on credit, friends and family, or even their retirement accounts to cover unexpected expenses.”
Savings and Homeownership
Such stats have bold implications for real estate, given that savings are the most common way that consumers finance their down payments. According to NAR’s most recent Buyer and Seller report, 65 percent of all homebuyers finance their down payments through savings.
Savings are particularly important for Gen X and Millennial buyers, of which 72 and 83 percent, respectively, rely on savings to make a down payment on a house; yet, as the GoBankingRates survey demonstrates, those two generations are particularly problematic when it comes to saving accounts.
Here is a graph that demonstrates the generational divide:
The correlations were similarly stark across income lines: for Americans making between $25,000 and $49,999, 31.6 percent had no money in their savings account, and 22.1 percent had no savings account at all; even for Americans with incomes between $50,000 and $74,999, 48.6 percent either had no savings or no account.
The State of Savings in America
The results of GoBankingRates’ survey seem dire, but they are very much in line with similar surveys from increasingly reputable sources:
- For instance, a recent Bankrate survey found that 29 percent of Americans have no emergency savings, and another 21 percent only have enough savings to cover three months of expenses.
- A study from NeighborWorks America found that 33 percent of Americans (or more than 72 million people) do not have any emergency savings, while for 47 percent, personal savings would last only three months.
- And finally, a Federal Reserve report noted that 57 percent of Americans who had savings prior to 2008 used up some or all of their savings following the recession, and that only 48 percent of Americans can cover an emergency $400 expense without either selling something or borrowing.