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Survey: 69% of Americans Have Less Than $1,000 in Savings
- ghshephard 10y agoGiven my savings account pays 0.01%, and a 30 day CD from my bank pays .75%, and the average dividend yield of the S&P 500 ETFs (like blackrock's IVV) net-of-fees is 2%, is it all surprising that nobody uses Savings Accounts anymore? Seems like rational behavior to me.
- sethammons 10y agoIn the article: > ...asked 7,000 people around the country how much money they had set aside in savings accounts for the future... I think that would include CDs and other savings vehicles. It is unclear if that counts retirement accounts.
- arbuge 10y agoNevertheless it seems like a flaw in the study if it's not counting other liquid sources of cash, such as checking accounts, brokerage accounts, cash itself, etc.
- dawnerd 10y agoThat reminds me, I need to move my cash out of savings. I'm insane for keeping that much in there without earning anything meaningful.
- intopieces 10y agoThis response comes up every single time this statistic gets posted. I assure you that your condition is not typical for the 69% mentioned in the statistic quoted. "The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?" http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/ http://www.theatlantic.com/magazine/archive/2016/05/my-secre... 1 in 3 Americans has $0 saved for Retirement, and 56% have less than $10,000 http://time.com/money/4258451/retirement-savings-survey/ http://time.com/money/4258451/retirement-savings-survey/
- ghshephard 10y agoFair enough - but, given the fascination a lot of people have with owning their home (which I do not), you would also have to include any positive equity (which can be leveraged in a number of ways) in their property in this scenario. I guess the question I would have is "What is the 10th/25th/Median percentile of net-liquidity" and "What is the expected downstream third-party income from Social Security/Pensions/etc..." expected. That paints a fuller picture of people's financial stability, and also identifies how important Social Security is to their wellbeing.
- jwatte 10y agoHome owners are not in the bottom half.
- madengr 10y agoThanks for that retirement savings link; been looking for that data. Yeah, forget the saving account. Retirement is going to be the real issue. Lot of people going to be eating dog food in the future. Pensions for anyone under 45 are pretty much non existent, with a few exceptions. Even if they are, the companies tend to screw with them. Our company just froze the salary for pension calculations (not that I have one), so somebody could work another 20 years and retire at a percentage of today's pay. At least I get a crappy annuity and 401k matching. New hires now get neither.
- jwatte 10y agoYou get at least something from social security, which every worker pays to sustain, and society then promises to keep going. (Worker/retiree ratio changes are going to be a problem.) Thus, retirement savings is not the top problem. However, the truth is that a majority of Americans worry about how to pay food and rent every month. This is not because they are all irresponsible human beings, but because American society makes it really freaking terrible to be in the bottom half. Retirement is out of reach; saving for an emergency has to fight with rent has to fight with prescription medications has to fight with clothes for your kids.
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- throwaway287391 10y agoAlly pays 1% interest for their free online savings accounts. I wouldn't be surprised if other online banks are offering even more; haven't checked in a while. (Oddly, looking at Ally's CD offerings, some of the shorter-term ones are <1%...wonder what value those could possibly offer vs. their savings account.) Somewhat tangentially, it always surprises me that people continue to use checking/savings accounts from banks like Chase, Wells Fargo, Bank of America, etc. when they pay terrible interest rates, don't reimburse ATM fees, and sometimes actually charge you for debit cards and/or paper checks. If it's the thought of not having access to real brick & mortar banks that scares you, Schwab is a great option (though they pay much less interest than the top online ones).
- kibibyte 10y agoAs far as I know, the only bank to offer a higher interest rate (for the entire balance--as opposed to the first X amount) is GS Bank at 1.05%. But I haven't seen anything higher.
- ghshephard 10y agoI can answer that for myself - no way in hell would I trust any substantial amount of money to https://en.wikipedia.org/wiki/Ally_Bank https://en.wikipedia.org/wiki/Ally_Bank. I'm somewhat more comfortable with trusting this entity - https://en.wikipedia.org/wiki/Wells_Fargo https://en.wikipedia.org/wiki/Wells_Fargo If you have your paycheck auto-depositied, you can avoid most/all of the fees.
- throwaway287391 10y agoEr, could you explain why? The Wikipedia articles you link to seem to very much make the case in the opposite direction... There doesn't seem to be anything damning in the Ally entry. Especially compared with the Wells Fargo entry, which includes a detailed 14 point list of "Controversies" (including the recent scandal and CEO resignation which should be fresh on everyone's minds).
- freyr 10y agoWhat bank gives you a 30 day CD at 0.75%? My bank (Bank of America) gives 0.03%.
- grogers 10y agoSeems fishy to me as well. Best I could find with a few minutes of googling was a 0.22% 30 day CD, but with a minimum of $95,000 [1]. Others I could find with low deposit limits are in the 0.10% area. Most banks don't even offer 30 day CDs it looks like. 1. https://www.usaa.com/inet/pages/bank_cd_rates https://www.usaa.com/inet/pages/bank_cd_rates
- ghshephard 10y agoJust double checked, and OCBC (Singapore) is currently offering 1% for 12 month deposit, no 30 day preferable rates.
- mtmail 10y agoSimilar study from the UK "Millions have less than £100 in savings" http://www.bbc.com/news/business-37504449 http://www.bbc.com/news/business-37504449
- shirro 10y agoI think it would be similar in lots of countries. Living in Australia, our household priority is to pay down debt. I don't understand the value of holding lots of cash while you have a mortgage. If cash is needed we can redraw. Ofcourse public health care is free here and education is still affordable and there is a social security safety net and compulsory superannuation payments. So it isn't like a family sickness will see us lose our home and sleeping under a bridge.
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- shados 10y agoThat is scary, but not surprising. Even if you gave someone without savings 600 bucks right now, chances are they'd turn around and buy a new iphone with it instead of saving it. And then you have all the people who are in a situation where they can't save if they wanted to, be it because of poor decisions or bad circumstances out of their control. And honestly, even if you CAN save...I'm very lucky and quite privileged, and was looking at my 401k recently. It's doing quite well (yay!), but if I extrapolate to retirement, I'm not even close to what I'll need to have a comfy retirement. The majority of people are just flat out screwed. How to solve this...who knows. Its a hard problem.
- jwatte 10y ago"chances are they'd turn around and buy a new iphone" Most in that situation would spend the money, but on needs like food or medication. The "blow it on a new iPhone" meme comes from an entitled right wing culture (that also made up the concept of a "Welfare Queen ")
- kobeya 10y ago> but on needs like food or medication Or debt. (Real debt -- the ones where they break your legs if you don't repay.) > The "blow it on a new iPhone" meme comes from an entitled right wing culture I would have kept "right wing" out of it. Entitlement stereotypes are on both sides of the aisle, no need to make this partisan.
- LyndsySimon 10y ago> [...] entitled right wing culture (that also made up the concept of a "Welfare Queen ") The first use of the term that I can find is from Jet Magazine in 1974. They're hardly "right-wing". https://books.google.com/books?id=DVsDAAAAMBAJ&lpg=PA1&pg=PA16#v=onepage&q&f=false https://books.google.com/books?id=DVsDAAAAMBAJ&lpg=PA1&pg=PA...
- nibnib 10y agoThat's not quite the same usage as Reagan though.
- rsmsky1 10y agoI think this is somewhat deceiving. I'm pretty most Americans have more than $1,000 in savings, maybe in their checking accounts, their stocks, etc.
- ilaksh 10y agoI have $0 in checking, $30 in Paypal, maybe $10 in bitcoin, no house, car, almost 0 furniture. No assets. I have been working for mainly startups (including my own for no pay part of that time) or small companies for the last several years. The reason there is no savings is because there is never any extra in recent years. There have always been things I went without, like insurance or more recently a car. Or eating out hardly ever.
- madengr 10y agoDo you expect the startups to pay out? Seems sort of like waiting to win the lottery. Even if it does pay out, maybe on average you won't come out ahead compared to a 9-5 daily grind. Maybe people ought to do the opposite. Work for the risky startup during middle age when you have a cushion built up, and you are opt not to give a shit.
- kobeya 10y agoUm, off-topic but you might be making poor life choices here. First of all we're in the middle of a boom cycle and any competent engineer (which I assume you are) can get a six-figure salary WITH equity at even the earliest-stage funded startups. Second, your chances of making it big on equity alone are pitifully small. The expected returns on startup equity is less than the salary cut you take when compared with the stable job at Big Co. The median return is zero. If you were bootstrapping your own startup with only ramen profitability, I would have mad respect for you. But you say you aren't even working on your own startup right now. Wherever you are working you are likely very underpaid for what you are doing.
- quickben 10y agoBut these 'competent engineers' rocking 100k+ in this boom cycle, are not 69% of the population. If you are in the lucky minority, be honest with yourself and put money aside while it lasts. I have friends for whom it didn't.
- iambateman 10y agoAnother poster asked this, but does this mean this group has less than $1000 in liquid assets, or less than $1000 in a "savings account"? Also it would be helpful to see how this has changed over time.
- rasz_pl 10y agoWhat assets? That Ram on the driveway loaded with a bike/jetski/boat on a trailer? 50' TV? iphones all around? its all on lease 40 days away from being repo'd.
- WalterSear 10y agoThis has totally never happened before. https://us-history-the-great-depression.wikispaces.com/Easy+Credit https://us-history-the-great-depression.wikispaces.com/Easy+...
- sosborn 10y agoMy house is an asset yet I owe quite a bit of money on it. Which way does it tilt the balance sheet for this survey?
- shorttime 10y agoWorth - mortgage principle = savings.
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- shorttime 10y agoWithout defining "savings" this article doesn't really say anything at all. Savings can be assumed as many things.
- fred_is_fred 10y agoThe article specifically says savings accounts. Only a damn fool would keep money there long term. My checking account earns 5x the interest and the money market account at my brokerage is about the same.
- qwrusz 10y agoObviously "savings account" and "in savings" are not the same thing. This survey and article don't seem professional - basically this is clickbait or they are clueless. But the main issue still is real. Regardless of "savings account" status, other studies show ~half of Americans are financially insecure today. Should an emergency expense of $2000 come up they don't have it. The problem is getting worse as baby boomers retire. If you include underfunded retirement savings in the group at risk then the vast, vast majority of Americans are in a financially insecure position. Pew Trusts did a study as well: "One in 3 American families reports having no savings at all, including 1 in 10 of those with incomes of more than $100,000 a year." "41 percent did not have enough liquid savings to cover the $2,000 cost of the typical household’s most expensive financial shock." Link to Pew report [pdf] http://www.pewtrusts.org/~/media/assets/2015/11/emergencysavingsreportnov2015.pdf http://www.pewtrusts.org/~/media/assets/2015/11/emergencysav...
- lithos 10y agoWow I was expecting a full blown article, and instead found something smaller than a write in opinion piece. Even worse the source document has far more interesting data on it, sorting by gender/age/location. Even if it is a self serving study by a service that is in the business of selling savings accounts. The data is pretty scary though. After finally getting a 6 month runway of living expenses I can't imagine going back. Even having a month or two runway makes it so easy to not make unreasonable mistakes.
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- namlem 10y agoThis is a stupid article. I don't even have a savings account. WTF is even the point when the interest is negligible? Money I need access to stays in my checking account, savings go in Vanguard.