For many Americans, a single unplanned expense could set them in a tailspin. Worse yet, those who will likely need a rainy-day fund the most are also the least prepared.
When broken down by age, young boomers fared the worst: Nearly one-third, or 32 percent, of those ages 53 to 62 said they had zero dollars saved in an emergency fund, compared with 24 percent of all others ages 18 or older, according to a Bankrate.com survey of 1,000 adults conducted this month. (Older boomers — over age 63 — were much more likely to have something set aside.)
Generally, the likelihood of having saved at least six months of expenses increases steadily with age, Bankrate said. Yet for younger boomers, "it's a reflection of prolonged unemployment in the years following the financial crisis," said Greg McBride, Bankrate's chief financial analyst.
And for this generation, facing the very real possibility of increased medical expenses in the near term, an unplanned bill can come at a severe cost.
"It's one thing to burn through your emergency savings but the problem mushrooms when people start raiding their retirement," McBride said.
Older Americans have also become steadily more pessimistic about their economic prospects, according to a separate study by United Income, a start-up that aims to apply big-data analysis to financial planning.
Overall, however, Americans are doing a better job at saving. Those with some savings, but not enough to cover three months' expenses, rose to 20 percent from 18 percent last year. Americans with enough savings to cover three months to five months of expenses also edged higher to 17 percent from 16 percent. And those who have enough to cover six months' expenses jumped to 31 percent from 28 percent last year, a new high since Bankrate began tracking the data seven years ago.
McBride recommends stashing at least a six-month cushion to cover anything from a dental bill to a car repair – but more if you are the sole breadwinner in your family or in business for yourself.
To get there, he suggests paying yourself first. "Set up a direct deposit from your paycheck into a dedicated savings account. If you wait until the end of the month, nothing will be left over," he said.
If there is, in fact, a surplus once all expenses have been paid out, "that gives you a second bite."