Americans have burned through their savings (2024)
A new poll for Newsweek showed that more than a fifth of Americans are without any savings, with another fifth saying that they have less than $1,000 in their bank accounts, a signal of how precarious some voters feel about their financial situation even as the U.S. economy has withstood the shocks of a high interest rate environment.
Asked "how much money do you personally hold in personal savings accounts," 22 percent answered "I don't have any savings" while another 20 percent said they had less than $1,000. Other answers revealed that 15 percent had between $1,000 to $5,000, 10 percent with savings of $5,000 to $10,000, 13 percent boasted $10,000 to $20,000 of cash in their bank accounts while 20 percent had more than $20,000.
In a sign of how precarious the economic situation was for some Americans, 23 percent of those surveyed said they only had a "few days" of savings left to finance their basic costs of living, the poll showed. The survey by Redfield & Wilton Strategies for Newsweek was carried out on January 18 with a sample size of 1,500 eligible voters in the U.S.
The poll results come amid a period of uncertainty for the U.S. economy, which has been shaped by elevated interest rates put in place by the Federal Reserve policymakers to slow down soaring inflation that at one point hit four-decade highs. For the better part of 2023, voters kept telling pollsters about their anxieties about the economy, worried that the country was headed in the wrong direction.
Inflation has slowed to 3.4 percent in December from the 9 percent peak it reached in the summer of 2022. But the hike in rates has reverberated through the economy, pushing up borrowing costs for things like homes, auto loans and business investment.
The acceleration of rates at their fastest clip since the 1980s to their current two-decade high of 5.25 to 5.5 percent was expected to slow down the economy and even plunge it into a recession and lead to mass layoffs.
But the economy has proved far more resilient than anticipated. Employers have kept hiring, wages have kept pace with inflation and some experts are projecting a soft landing, where the Fed's rate moves would help moderate inflation without doing too much damage to the jobs market. In December, Fed policymakers indicated that they were done raising rates for the foreseeable future.
"The odds of a recession have declined over the past several months because of a strong labor market, a deceleration in inflation, and looser financial conditions on the back of the impending Fed pivot to rate cuts," Oxford Economics analysts said in a note last week shared with Newsweek. "Our subjective odds of a recession this year are now less than 50 [percent]."
This shift has begun to be captured in some surveys, where some Americans are feeling a little more confident about their financial conditions compared to only a few months ago.
When it comes to the pocketbooks of Americans, Oxford Economics analysts suggest that with Americans still keeping their jobs and earning, this will buoy the economy.
"While we expect the pace of spending to slow in 2024, there are reasons to believe consumers will keep their wallets open. Strong wage gains alongside falling inflation means real wage gains will remain a support to consumption," they said.
There were risks, though, to the soft landing scenario, Oxford Economics warned.
"The key downside risks to our forecast are the potential for policy uncertainty to weigh on hiring and investment more than anticipated, sudden weakness to the supply side of the economy, and geopolitical tensions," they said.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Other answers revealed that 15 percent had between $1,000 to $5,000, 10 percent with savings of $5,000 to $10,000, 13 percent boasted $10,000 to $20,000 of cash in their bank accounts while 20 percent had more than $20,000.
The financial services company surveyed more than 1,000 Americans regarding their retirement savings. Twenty-eight percent of respondents said they have $0 set aside for their later years.
About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well. Of those surveyed, 60% report having $500 or less in their checking accounts, while only about 12% have $2,001 or more.
Americans “have consistently saved less in the aftermath of each recession than they did in the prior cycle,” according to an analysis from Wells Fargo economists released Thursday. Americans haven't been stashing money into their savings accounts like they used to, according to government statistics.
– Nearly 13 percent said they have $50,000 to $99,999. – More than 12 percent said they have $100,000 to $199,999. – Nearly 10 percent have $200,000 to $299,999. – About 16 percent have $300,000 or more in retirement savings.
The short answer is yes, $500,000 is enough for many retirees. The question is how that will work out for you. With an income source like Social Security, modes spending, and a bit of good luck, this is feasible. And when two people in your household get Social Security or pension income, it's even easier.
You can still live a fulfilling life as a retiree with little to no savings. It just may look different than you originally planned. With a little pre-planning, relying on Social Security income and making lifestyle modifications—you may be able to meet your retirement needs.
A majority, 65%, say they live paycheck to paycheck, according to CNBC and SurveyMonkey's recent Your Money International Financial Security Survey, which polled 498 U.S. adults. That's a slight increase from last year's results, which found that 58% of Americans considered themselves to be living paycheck to paycheck.
Average 401(k) plan balances reached $112,572 in 2022, down from $141,542 in 2021 and $129,157 in 2020, according to Vanguard's “How America Saves 2023” report.
Contrarily, the wealthiest 20% of households still maintain cash savings at approximately 8% above pre-pandemic levels. Ultimately, with inflation taken into account, the majority of Americans are worse off financially compared with before the start of the pandemic.
The median savings account balance for all families in the U.S. was $8,000 in 2022. Generally, higher-income earners and older individuals save more than younger ones. Some experts suggest three to six months' living expenses as a goal.
Feelings of financial insecurity among Americans have reached their highest point in at least a decade. A third of American adults in Northwestern Mutual's 2024 Planning & Progress survey said they don't feel financially secure. That's up from 27% in 2023 and the highest measure going back to 2012.
Is $20,000 a Good Amount of Savings? Having $20,000 in a savings account is a good starting point if you want to create a sizable emergency fund. When the occasional rainy day comes along, you'll be financially prepared for it. Of course, $20,000 may only go so far if you find yourself in an extreme situation.
The recommended amount to save varies from person to person, as everyone's financial situation differs. But for many people, $20,000 is a sizable emergency fund goal that will go far. If you have a large chunk of savings set aside, make sure you keep it in a bank account that earns interest.
In terms of savings accounts specifically, you'll likely find different estimates from different sources. The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.
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