Two years after the COVID-19 epidemic put the United States into lockdown, a new study of 1,600 working adults found that 30 percent of people do not have emergency savings account to cover unforeseen expenses.
It’s likely that number would be greater if the 40 percent of the population who are not now employed were taken into consideration.
According to the results of the study, which was done by the Bipartisan Policy Center in collaboration with the Funding Our Future coalition and Morning Consult, 45 percent of people with household incomes under $50,000 do not have an emergency savings fund in place.
Those with household incomes between $50,000 and $100,000 have a lower proportion of the population (26 percent). In comparison, by October 2021, Americans had saved almost 36% of the money they received as part of the stimulus package.
Even among middle-income working adults, financial insecurity is prevalent, as evidenced by the fact that 12 percent of those with annual incomes greater than $100,000 do not save for an unexpected need.
Some of those who answered “no” to having emergency savings in a checking or savings account did, however, indicate that they had money in a retirement account that they could access in the event of a financial crisis.
Nearly a third (33 percent) of working adults said they are unsure about their capacity to cover a $400 emergency charge without resorting to credit cards or tapping into their retirement accounts, and 8 percent indicated they could not afford the expense.
Further investigation revealed that 22 percent of Americans who have emergency savings have less than $250 in their checking or savings account, according to the study results.
35 percent of working Americans have $1,500 or more in savings, which is a hopeful figure. However, it is possible that this will not be enough to cover household expenses.
Thirty percent of those polled indicated they could cover their expenses for a month or less if they lost their work, while only 15% said they could cover their expenses for a year or longer.
The fact that 42 percent of working Americans report feeling “somewhat” or “extremely” financially insecure was another notable conclusion. And it isn’t only that they aren’t prepared in the event of a disaster.
According to the results of the poll, 39 percent of working adults reported having difficulty covering personal expenses such as housing, power bills, and groceries in the previous 12 months.
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14 percent of respondents polled indicated they borrowed money from their retirement accounts or withdrew monies from their retirement savings to offset the price of the healthcare reform.
When combined with rising interest rates and a tumbling stock market, borrowing against retirement may leave people with insufficient assets as their retirement date draws closer.
Similarly, using credit cards to pay for emergencies may result in them receiving additional bills that they are unable to pay.