Fed survey shows 40 percent of adults still can't cover a $400 emergency expense
- About 40 percent of adults said they would not be able to cover a $400 unexpected expense with cash.
- Among those with retirement savings, less than 40 percent think they are on track to have enough in their golden years, and 25 percent have nothing saved at all.
Even with most Americans feeling more financially secure than they did five years ago, many are struggling to set aside any type of savings.
About 40 percent of adults said that if faced with a $400 unexpected expense, they would either not be able to pay it or would do so by selling something or borrowing money, according to the Federal Reserve's Report on the Economic Well-Being of U.S. Households in 2017, released on Tuesday.
Additionally, less than 40 percent of nonretired adults think they are on track in saving for their golden years and 25 percent have no retirement savings or pension at all, the report says.
These results show that "millions of Americans are in desperate need of establishing a savings habit before it's too late," said Greg McBride, chief financial analyst at Bankrate.
The survey, conducted in November and December, includes information from 12,000 people across the country about their financial well-being.
In general, the improving results mirror the economic expansion that's occurred since the Federal Reserve began conducted the study in 2013. Fully 74 percent of respondents said they either were doing OK or living comfortably in 2017, up from 70 percent a year ago and 63 percent in 2013.
Nevertheless, saving can be tricky, especially for households already working with a tight budget. Debt — i.e., from credit cards, student loans — also can stand in the way of being able to set aside money regularly.
Overall consumer debt, excluding mortgages, is on track to reach $4 billion this year, according to recent data from LendingTree.
For other people, part of the hurdle is making savings a habit. Allocating an amount to a retirement or savings account (or ideally both) before your paycheck reaches you can make setting money aside easier.
"Use direct deposit and payroll deductions to automate your savings so it happens first, before you even roll out of bed on payday morning," McBride said.
More from Personal Finance:
Five facts you didn't know about the cannabis industry
More states are starting tax-advantaged savings accounts aimed at first-time home buyers
This is how much of a home $300,000 will buy you across the US
This 39-year-old makes $160,000 a month in passive income: '3 businesses you can start today for $0'
Russian offensive in Bakhmut could be stalling; Moscow official says West wants to tear Russia apart
This 40-year-old introvert makes $2 million a year—3 things she always does to look more confident
European lawmakers are quietly miffed at U.S. regulators over SVB's collapse
Ben Affleck and Matt Damon shared a bank account as teens: 'It's a weird thing in retrospect'