Rainy-Day Savings Drying Up for More Americans
Americans are seeing more zeros in their bank accounts these days — and not the good kind.
As Americans struggle to put the economic downturn behind, many appear to be going the wrong way. In one key measure of security, the number of Americans with no emergency savings rose to 28 percent of Americans, slipping from 24 percent of the year before, according to a new Bankrate.com survey.
Only a quarter of those surveyed have squirreled away sufficient savings for six months or more, the amount that financial advisors suggest to have on hand in the event of an emergency.
“We have a long and storied history in this country of spending and keeping up with the Joneses and not making savings a priority,” said Greg McBride, Bankrate.com’s CEO. “I mean, look, this is not confined to emergency savings. Same is true when we look at retirement savings.”
Stagnant wages and creeping household expenses have not helped the savings rate, McBride told CNBC's "Closing Bell."
"For 30 years, we’ve seen a perpetual decline in the savings rate, the rate of income that people are putting away for a rainy day, and we’re seeing the evidence of that now where only one in four American households actually have an adequate savings cushion," he said. "It just has to become a priority by paying yourself first.”
The survey’s findings come amid mixed news for the economy. Unemployment inched higher in May for the first time in nearly a year to hit 8.2 percentwhile a new report from the Federal Reserve painted a bleak picture of the median American family’s net worth.
The median family’s net worth was about $77,000 in 2010, down from roughly $126,000 three years before. Median family income dropped nearly 8 percent during the same period. While this data is older, it illustrates issues that continue to weight on the economy.
Although net worth has fallen largely due to the housing crisis, total household debt has also dropped slightly as Americans, like banks, seek to de-leverage and shed liabilities.
Despite continuing their climb out of total household debt, Americans are digging deeper into their pockets to fund the next generation’s future. According to a new report from the Federal Reserve Bank of New York, outstanding education debtrose to $904 billion in March, up $293 billion in the last four years.
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