A study of 1,600 working individuals found that 30 percent have no emergency money set up for unforeseen expenses two years after Americans were put on lockdown due to the COVID-19 epidemic. If 40% of the currently unemployed population were included, the figure would almost certainly be higher.
According to the poll, 45 percent of people with a family income under $50,000 have no emergency savings conducted by The Bipartisan Policy Center, the Funding Our Future alliance, and Morning Consult. For individuals with a household income of $50,000 to $100,000, the percentage reduces to 26%. On the other hand, Americans had saved around 36% of their stimulus money by October 2021.
Surprisingly, 12 percent of people earning more than $100,000 do not save for an emergency, indicating that financial instability affects even middle-income working adults. Some respondents who said they didn’t have emergency funds in a checking or savings account also said they had money in a retirement account that they could access in an emergency.
About a third of working adults are “very” or “extremely” concerned about their capacity to cover a $400 emergency charge without using a credit card or tapping into their retirement account. At the same time, 8% say they can’t afford it.
According to the report, further investigation revealed that 22% of Americans with emergency funds have less than $250 in their bank or savings account. 35 percent of working Americans had $1,500 or more in savings, according to optimistic estimates. However, that may not be sufficient to cover living expenditures. Thirty percent stated they could afford their expenses for a month or less if they lost their work, while only 15% indicated they could cover them for a year or longer.
Another major conclusion was that 42% of working Americans are financially insecure, “somewhat” or “extremely.” It’s not only that they’re unprepared for a disaster. According to the survey, 39% of working individuals had difficulty covering personal expenses like housing, power bills, and groceries in the previous 12 months. As a result, 14% of those polled indicated they borrowed money from their retirement account or took money out of their retirement savings to cover the expenditures.
Read More:- $1,200 in Stimulus Checks Grew to $7,285 in Value
Borrowing against retirement might leave people short on finances when retirement approaches, especially with rising interest rates and a collapsing stock market. Similarly, using credit cards to pay for unexpected expenses could leave them with even more outstanding debt.
Read More:- 65.1% of Kentucky Residents Used Stimulus Funds for Basic Expenses!
The BPC survey proposed the notion of employer-sponsored emergency savings accounts, with money taken directly from employees’ paychecks, to address financial instability. Working Americans were enthusiastic about this potential solution, with 61% stating they would contribute to it in addition to their 401(k) or other employer retirement account.
Read More:- Update on the Fourth Stimulus Check: Some Americans Are Eligible for More Money
