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.
Fewer than half of Americans, 44%, say they can afford to pay a $1,000 emergency expense from their savings, according to Bankrate's survey of more than 1,000 respondents conducted in December. That is up from 43% in 2023, yet level when compared to 2022.
This dropped in the '90s to about 5% and remained there until the pandemic. The savings rate had an all-time high of 32% in April of 2020, beating the previous high of 17.3 in May 1975. January 2022 saw a savings rate of 4.1% and the last reported rate was February 2024 with a savings rate of 3.6%.
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.
The poll also found that among those who have been saving for retirement, 6.7% have saved between $10,000 and $49,999, 12.6% have saved between $50,000 and $99,999, 12% have saved between $100,000 and $199,999, 9.9% have saved between $200,000 and $299,999 and 16.5% have saved $300,000 or more.
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year.
Many Americans have alarmingly low bank account balances. A recent GOBankingRates survey found that the largest portion of Americans (36%) have $100 or less in their savings account, with the next most common response being $101 to $500 (14% of Americans).
There are 21,951,000 people/households with a net worth of or above $1 million in the USA. There are 1,456,000 people/households with a net worth of or above $10 million in the USA.
For many people, the balancing act between income and expenses leaves little wiggle room for savings. The majority of Americans — 60% according to a LendingClub report — live paycheck to paycheck, with no additional funds left over after they cover expenses each month.
As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022.
Another big part of the problem when it comes to saving for retirement is that savings plans are not universally available in the U.S. Almost half of private sector employees ages 18 to 64, or 57 million Americans, do not have the option to save for retirement at work.
The Federal Reserve also measures median and mean (average) savings across other types of financial assets. According to the data, the average 70-year-old has approximately: $60,000 in transaction accounts (including checking and savings)$127,000 in certificate of deposit (CD) accounts.
9% of Americans have between $100,000 and $200,000 saved, and 4% have between $200,000 and $350,000 saved. Finally, 4% have between $350,000 and $500,000 saved, and about 4% have more than $500,000.
There's no one-size-fits-all number in your bank or investment account that means you've achieved this stability, but $100,000 is a good amount to aim for. For most people, it's not anywhere near enough to retire on, but accumulating that much cash is usually a sign that something's going right with your finances.
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.
And according to a new survey from Santander Bank, the answer is somewhat mixed with only about 20% of Americans saying they have more than $25,000 in their savings to help break down this survey as well as giving us more tips on how to save.
9% of Americans have between $100,000 and $200,000 saved, and 4% have between $200,000 and $350,000 saved. Finally, 4% have between $350,000 and $500,000 saved, and about 4% have more than $500,000.
Introduction: My name is Kimberely Baumbach CPA, I am a gorgeous, bright, charming, encouraging, zealous, lively, good person who loves writing and wants to share my knowledge and understanding with you.
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