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69% of Americans Have Less Than $1,000 in Savings Accounts
- marcoperaza 10y agoKind of a stupid statistic, how much people have in their savings account. With interest rates so low, a savings account is basically worthless. The more interesting question is how much they have saved in total, across all accounts and investments.
- jp555 10y agoRight on, and if you include account fees, it's equivalent to disturbingly high negative interest.
- mattnewton 10y agoNot to mention inflation..
- djrogers 10y agoIf you've got account fees on your savings account you need a new bank. Hint - just because there's one on every corner and their headquarters is a 40 story building downtown doesn't mean it's a good bank. Local banks and credit unions are almost always better for you and your money..
- logfromblammo 10y agoFor instance, Wells Fargo's Way2Save has 0.01% interest (compounded daily at 0.000000274%), and a $5 monthly service fee for minimum daily account balances less than $300. So if you deposit $299 on 1 January, and are over 18, you end up with $239 on 31 December. Yay for that -20% interest rate. So make sure you deposit that extra $1 to hit $300. But if the daily-compounded interest is rounded to the nearest $0.01, you don't even get any interest unless you have a balance of $18250.91 or greater. In order to get the minimum possible $3.65 daily-compounded interest on a balance of $300, the APY has to be at least 1.2167%. Just be honest and say the rate is 0%, man. It's no wonder all those Wells Fargo employees had to commit fraud to open more of those accounts. PT Barnum's maxim notwithstanding, there just aren't enough suckers in the world to open a new Way2Save account of their own volition. My spouse recently suggested that we open savings accounts for the kids, so I pointed out the abysmally low effective interest rates on accounts . We're opening investment accounts for them instead. Kids, the way to save is to dump everything in index funds and forget it's there.
- JoshTriplett 10y agoIn fact, these days some checking accounts pay more interest than a savings account. And even if they don't, not much point in keeping a separate savings account if it doesn't pay any better than a checking account. (Other than for organizational reasons.) That said, despite the savings-account-specific question, I suspect the statistics would look quite similar if you made the question less account-type-specific and just asked how much money people had saved away.
- pmoriarty 10y agoThere are security reasons as well. If you do a lot of transactions from your checking account, and only occasionally transfer from savings to checking, then the former is more likely to be compromised than the latter. This difference increases if you use your checking account online, at via third party pin entry devices, or even at your bank's ATMs while only accessing your savings account from a teller in your bank. All of the former methods of access can be compromised and you can lose the contents of your checking account -- which would be limited if you didn't keep all of your money in your checking account. Unlike credit cards, bank accounts aren't protected against theft or fraud, so the risk of theft is a real possibility that could cost you.
- JoshTriplett 10y agoTrue. On the other hand, if the only thing you ever use your checking account for is to receive direct deposits and pay your credit card bill, then adding a savings account to that doesn't really improve your security. I'd definitely recommend not doing any transactions from the same account that you keep most of your money in; have a layer of insulation. Don't use a debit card or a bank-account-backed "credit" card.
- dudul 10y agoThe difference may be with how available the money is. Having money on an IRA is important, but cannot really be used in case of emergency.
- AnimalMuppet 10y agoIIRC, it can, at least for a medical emergency. Of course, you have to pay it back, with interest...
- marcoperaza 10y agoRight, but given the worthless interest rates on saving accounts these days, a lot of people probably have their emergency funds in checking accounts. And if you own stocks and such, those are pretty liquid.
- pilom 10y agoActually if it is in a Roth IRA, you can withdraw all of the principal (but none of the gains) at any time, for any reason, tax and penalty free.
- deleted 10y ago[deleted]
- ChadMoran 10y agoI do. I use Ally banking which is 1%. Great place to store a house down payment.
- fredleblanc 10y agoI just did exactly this myself. So many people say that you'll make so much more in the market, but 1% guaranteed feels so much better than maybe something more. And we got a new house in the end!
- ChadMoran 10y agoUnless you're looking to buy a house in 5+ years putting your down payment in the market is super risky. When you have $100k+ in a savings account $1k/yr isn't bad.
- ovulator 10y agoHow much they have in a savings account? Who has a savings account? I have $5 in my savings account because my credit union makes me. It has around a 0.025% interest rate so I would be stupid to put any more money into it.
- jostmey 10y agoYeah, my interpretation is that people are not storing their wealth in dollars, which is a bad sign for the currency.
- sdegutis 10y agoIt's not so much that dollars are the problem, it's that there are more lucrative ways to store money, ways which actually get returns. Savings accounts today are just a slightly more secure way of hiding money under the bed. Whereas if you invest it in basically anything else, you'll have a much better chance of it increasing, with often times very low risk of it decreasing. Modern savings account plans are the real problem here.
- umanwizard 10y agoWhat gives higher returns but near-zero risk?
- striking 10y agoBonds, at least? Mutual funds that make use of bonds? (This is a question, not an answer, by the way. I have no idea.)
- jonknee 10y agoBond rates are low too and have transaction costs. Very poor substitute for a savings account with an emergency fund. http://www.bloomberg.com/markets/rates-bonds/government-bonds/us http://www.bloomberg.com/markets/rates-bonds/government-bond... (.27% for 3 month treasuries, just .79% for 2 year)
- rocky1138 10y agoThis is a really poor title. It should read "in Savings Accounts"
- stevep001 10y agoA better title would be "Ad supported site: Not enough Americans are clicking on our savings account ads."
- ghaff 10y agoYep. I have no doubt that savings--wherever they're held--are arguably lower than they "should" be (for all sorts of reasons) but this site does seem to be actively pushing people toward actual traditional savings accounts.
- sctb 10y agoThanks, we've updated the submission title.
- NiceGuy69 10y agoNice.
- zackify 10y agoIronic, a website talking about banking can't even properly load all of their assets over https....
- justinlardinois 10y agoI'm not sure I see how that's ironic.
- needcaffeine 10y agoTaken literally, I fall in this 69%, because my emergency funds are in my checking account. I'd guess that most people keep their money spread across different kinds of accounts, assets, and investments. If we don't take this literally, then perhaps the concern is that most people have no savings anywhere, and live paycheck to paycheck.
- vlunkr 10y agoThey really need to say in the article what they mean by savings, because otherwise it is useless. And if it means literal saving accounts, then who cares.
- mikeash 10y agoThey do say. It's in the first sentence, in big letters at the top of the first chart, and repeated several times after. Edit: to make this more productive than just a "read the article!" comment, they are specifically talking about savings accounts, not any other kind of savings.
- tantalor 10y agoI think you're wrong. This website appears to consider CD, IRA, 401(k), and stocks/bonds as "savings accounts". See https://www.gobankingrates.com/personal-finance/how-save-million-dollars/ https://www.gobankingrates.com/personal-finance/how-save-mil...
- mikeash 10y agoWell, the question was literally "How much money do you have saved in your savings account?" Regardless of what they think it means, I'm pretty sure the vast majority of people will interpret "savings account" as actual savings accounts.
- tantalor 10y agoYes totally agree, question was really bad.
- RmDen 10y agoI would like to see what % of the stock market is held by individuals. 0 in savings but 100K in the stock market..if you get an average Div Yield of 2% (not difficult if you add AT&T, PCG, GE, DUK etc etc to your holdings) you would get a much better return, not even counting the price increase. Also how many people have 0 in savings but 100K+ in 401K/IRA accounts. Nobody saves in a cash account for retirement right? why would you, you get no tax break
- xenihn 10y agoI don't like how the article isn't exactly clear on whether the people with less than $1,000 in their savings aren't simply using their checking accounts to store their cash. I've seen similar articles about a large percentage of Americans being unable to come up with $x amount of money on short notice for an emergency. I think that wording is more specific -- it implies that they don't have the money in any sort of liquid form, whether that be bank accounts, physical assets, or even cryptocurrencies.
- theandrewbailey 10y agoI view savings accounts as a staging area for other kinds of investment (house, stocks, etc). It's not meant to be the primary storage, but absolutely can count towards retirement.
- vonklaus 10y agoJust to counterbalance some anecdotes, I-- as well as many friends; have literally no savings and very little in the way of assets. Given trends towards renting, part-time pay, lack of employee benefits and on-demand services; many Americans have little in the way of assets
- pilom 10y agoDo you think it is because you collectively have chosen lives that encourage higher spending than average (median annual spending of single people is about 32k/year) or because you have been unable to find consistent work that pays $15/hour?
- okwhatthe2 10y agoOnly 6.7% of the global population have a college degree.
- MichaelBurge 10y agoI don't even have a savings account, but I've got $50k just lying around in a dozen checking accounts. The article is written to conclude that I'm in dire straits.
- ghaff 10y agoNo, it's written to conclude that you really need to click on their links and open an account with one of the places you're referred to.
- pmoriarty 10y agoThere seems to be a real disconnect between some HN readers and most Americans, who have a median household income of $54k. Half of Americans live on less. A lot of them live paycheck to paycheck (if they're fortunate enough to have a job at all) and many have huge debts on top.
- yummyfajitas 10y agoThere seems to be a real disconnect between some HN readers and most Chinese, who have a median income of $10k. Half of the Chinese live on less. Most of them don't live paycheck to paycheck and many don't have huge debts on top. Instead, the Chinese are financially responsible and save between 25% and 50% of their income. They accomplish this by reducing their consumption. http://www.forbes.com/sites/moneybuilder/2010/06/24/one-big-difference-between-chinese-and-american-households-debt/ http://www.forbes.com/sites/moneybuilder/2010/06/24/one-big-... [edit: I misread, apparently it's urban Chinese. A little more googling gives similar numbers, so I stand by the point I'm making. https://www.bloomberg.com/news/articles/2016-03-09/here-s-what-china-s-middle-class-really-earn-and-spend https://www.bloomberg.com/news/articles/2016-03-09/here-s-wh... http://www.chinadaily.com.cn/china/2016-01/21/content_23183484.htm http://www.chinadaily.com.cn/china/2016-01/21/content_231834... ]
- notyourwork 10y agoAmerica loves to live on credit and extend into the future. I appreciate your comment quite a bit for its humor and sarcastic tone.
- tn13 10y ago69% Americans include children, elderly, housewives, daily wage people etc. who do not maintain an active bank account. The best would be to check this number household and consider all savings instead of merely savings bank account.
- e0m 10y agoGiven that the best savings / MMA accounts are netting at most 1.10%, and inflation has swung between ~1% and 3% over the past 10 years, you're likely losing money with a savings account. Better to dump it in a major index fund or bonds if you're feeling cautious. Most people with substantial incomes realize this and do this anyway. I wonder if investment portfolios were included when they asked about "savings" accounts?
- Dutchie 10y agoI don't know about the USA, but in Europe "ordinary" people don't do investment portfolios. You can safely assume that if they don't have any savings, they most certainly won't have investment portfolios.
- plandis 10y agoI find that hard to believe. Europeans don't have retirement investments? Even if it's just a pension they have some sort of portfolio even if it's not managed by the individual.
- GFischer 10y agoI don't know about Europe, but here in Uruguay and South America in general you have absolutely no say about what they do with your pension money. There are even laws mandating the pension funds to invest in local Treasury bonds (which are fortunately reasonably safe and high-yield, Uruguay is among the most stable in the continent) In Latin America in general pension funds are mismanaged and periodically raided by populist governments.
- Dutchie 10y agoPensions are managed by pension funds. Can't touch 'm until you're 67 (in the Netherlands). And even then you won't receive a lump sum, but a monthly allowance (that's how I see it). All employees take part in a pension fund, as mandated by law. It's one very important reason why I'm self employed. It's the only way to avoid this nonsense.
- 10y ago
- Nano2rad 10y agoSavings are not necessary in countries with social security.
- rm_-rf_slash 10y agoGot a letter from the SSA the other day. Said quite clearly with no ambiguity that Social Security should not be considered to provide more than 40% of your retirement income. Savings are necessary if you want to live out your old age at a standard above "almost poverty."
- justinlardinois 10y agoEven in countries with robust social security programs, I imagine many would see value in having more money than the baseline government benefits provide.
- GFischer 10y agoPreviously very heavily discussed when the number was 62%: https://news.ycombinator.com/item?id=10353954 https://news.ycombinator.com/item?id=10353954 (the "past" option doesn't find it because these are new numbers) A relevant link at the time: 47% of Americans say they lack the cash to pay a surprise $400 bill http://www.politifact.com/punditfact/statements/2015/jun/09/.. http://www.politifact.com/punditfact/statements/2015/jun/09/....
- plandis 10y agoTo be fair why would anyone have a savings account? The interest is terrible and there are withdrawal limits. With interest rates being what they are keeping liquid cash in a checking account seems optimal
- justinlardinois 10y agoI do it only because I find it useful to segregate my cash savings from the rest of my money. But you have a good point, especially because the survey asked specifically about savings accounts: https://news.ycombinator.com/item?id=12549863 https://news.ycombinator.com/item?id=12549863
- asciihacker 10y agoHolding wealth in the dollar means holding wealth in a depreciating asset. Gold, silver, bitcoin, real estate, etc much preferred. But given that my income and expenses are head up (at the moment), I'm in the same boat ... 7k net in and 7k out, a lot of which is me re-buying my own CC debt with loans from lending club, etc.
- pilom 10y agoBitcoin is by definition depreciating. Precious metals have very little utility and are only used as stores of value. They can not generate dividends and are therefore likely to under perform in the very long term: http://www.businessinsider.com/buffett-on-gold-2012-2 http://www.businessinsider.com/buffett-on-gold-2012-2 Real estate can be a decent way to store money long term because of the rent you can collect. Because many people are highly leveraged with real estate, selling before your mortgage is paid off can be very volatile.
- 1812Overture 10y agoGood real estate investment: Buying a rental property. Bad real estate investment: Buying a bigger house than you need for yourself hoping it will go up in value.
- wibbleywobbley 10y agoI have less than $1000 in my savings account because I still have a student loan that has an 11% interest rate. I work two jobs and pay upwards of $3000 a month towards my student loans. I've had zero luck refinancing my student loans because I "don't have enough money in savings", despite being years ahead on my payments.
- pilom 10y agoI hate it that they equate "how much you have in your savings account" with "how good you are at saving money." Even if you ignore retirement savings, what about Checking accounts? What about Roth IRAs that can have all of the principal removed tax and penalty free? A person could be REALLY good at savings and just have chosen that their liquid cash stays in checking accounts and emergency funds stay in their Roth IRA.
- justinlardinois 10y ago> Low-Income Adults Struggle the Most With Saving Money Is this really a significant enough conclusion to make a subheadline? It seems obvious to me that those who are living paycheck to paycheck (or close to it) would have trouble saving.
- doingmyting 10y agoI've never actually gotten the point of having a savings account. I opened one with chase when they offered me $150 bonus and promptly closed it soon after. This survey to me seems useless.