A new survey has found that more than half of Americans have less than $1,000 in their savings accounts.
GOBankingRates released the results of their 2017 survey, revealing that 57 percent have less than $1,000 in their savings accounts. It’s actually an improvement from last year, when 69 percent reported having less than $1,000 socked away for a rainy day. In other good news, 25 percent of Americans now say they have $10,000 or more in savings, which is an increase of 10 percentage points from 2016.
“Having cash in a savings account is important because life happens,” said Alex Whitehouse, president and CEO of Whitehouse Wealth Management in Vancouver, Washington. “Companies lay off employees, cars break down and people get sick. Without savings, unexpected spending forces people to take on debt, frequently using credit cards. At 16 percent or more interest, credit cards become a very costly way to handle sudden expenses.”
But a higher percentage of the 8,000 respondents reported having no savings at all from their gross pay: 39 percent, up from 34 percent in 2016, meaning these people aren’t prepared for any financial hardships or unforeseen expenses that might come their way – not to mention funding future retirement.
“Unfortunately, many people are living paycheck to paycheck, struggling to pay off student loans and credit cards,” he said. “For those saddled with an enormous amount of debt, building savings can feel like climbing Everest.”
It should come as no surprise that older Americans are better at saving than younger ones. Millennials (ages 18 to 34) are more likely than other generations to have nothing saved from their salary, while adults 65 and older are more likely to have $10,000 or more in a personal finance savings account.
“As the current wave of baby boomers retires, they are increasing their savings versus years past,” Whitehouse said. “The market crash of 2008 is still in the back of their minds, and they are increasing savings to protect against the next drop.”