One-in-Three U.S. Adults Has No Emergency Savings Despite Improving Economy, Says New Survey
Wednesday, April 1, 2015
An improving economy has done little to help people prepare for a financial emergency, with 34 percent of adults in America — more than 72 million people — saying that they don’t have any emergency savings, according to the second annual financial capability survey from NeighborWorks America. That is up from 29 percent of adults reporting no emergency savings in the similar survey one year ago.
In the survey, 47 percent of adults said that their savings would last three months or less. That’s much higher than one year ago when 41 percent said that they would go through their emergency funds in less than 90 days.
The survey results were released today by NeighborWorks America to mark the beginning of National Financial Capability month, and to call attention to the fragility of many families’ finances despite an improving economy and a stock market chasing records.
“These data are sobering, but not that surprising for those of us who have been working on the front-lines to help families rebuild their finances,” said Paul Weech, president and CEO of NeighborWorks America. “The hole that many people found themselves in due to the Great Recession — dug by sharply reduced home equity during the crisis and lagging wages during the recovery — was deep and digging out is going to take more time.”
Moreover, the percentage of adults saying saving for emergencies is an important financial goal fell to just 1 percent, from 5 percent one year ago suggesting that the Great Recession has too quickly become a distant memory.
While the recession is over, most economists say the economy is on tenuous ground. That is why the absence of any savings for one-third of adults, and the low amount of emergency funds for many in general is particularly worrisome in light of how long it takes the average person who becomes unemployed, and would need to draw on emergency savings, to find a new job. According to February data from the Bureau of Labor Statistics, the average unemployed person was out of work for 31 weeks, more than twice as long as people say that their emergency savings would last.
Among those surveyed nationally, 34 percent of adults report no emergency savings; of these 50 percent of African-American and 42 percent of Hispanic adults said that they had no emergency savings. That is up from 43 percent and 39 percent, respectively, in 2014.
As might be expected, the survey results bore out that the more income a person has, the more likely they are to have built an emergency fund. Approximately 19 percent of people making $100,000 or more per year said that they had no emergency fund, while 53 percent of people earning less than $40,000 said that they had no such reserve. Many people whose income places them squarely in the middle class also are financially vulnerable, with 35 percent of adults with income between $40-59,000 holding no emergency fund.