The economy may be improving but many American families are still weighed down by debt and without a safety net.
One out of five families owes more on credit cards, medical bills, student loans and other unsecured debt than they have in savings, according to a new University of Michigan report. And the number of families surveyed at the end of 2011 that have no savings at all increased to 23.4 percent, compared with 18.5 percent in 2009.
"The people who were down and out, without much money, in the recession have ended up staying there or even worse," says Frank Stafford, professor of economics at University of Michigan Institute for Social Research and co-author of the report.
And the mortgage crisis is not over. Among homeowners, 1.7 percent said that they expect to fall behind on their mortgage payments in the near future. At least that is slightly less than in 2009, when 1.9 percent expected to run into mortgage problems.
At a time many Americans are trying to claw their way out of debt, they have no emergency fund and little or no retirement savings. Sixty percent of workers say that the value of their savings and investments is less than $25,000, according to EBRI's 2012 Retirement Confidence Survey. And retirement confidence is at historically low levels.
American workers who went through long spells of unemployment often have had to drain down their savings. Many cashed in their retirement savings to help them keep up with their bills, Stafford says. And even when they finally have gotten a job they could not easily improve their finances.
"They still have debt to deal with before they can take care of things like saving more money or paying for their kids' college education," says Gail Cunningham, director of consumer education for Credit.com.
Not everyone is under dire financial straits. In fact, 14.6 percent of American households have more than $50,000 in saving accounts and other liquid assets, such as CDs and bonds. That is up from 11.8 percent in 2009.
Two things that may have helped boost their savings. "They may be trying to get rid of risky investments, such as stocks, and seek shelter from liquid assets" such as savings accounts, CDs and bonds, Stafford says. And they may be cutting back on their spending.
And nearly half of families say they have no debt at all from credit cards and other unsecured loans, the same percentage as in 2009, the report says.
Unfortunately, the number of families who are underwater in debt has risen.
Now, 10 percent of families owe more than $30,000 in unsecured debt, up from 8.5 percent in 2009. "I talk all the time to people who are still just hanging on by their fingernails," Cunningham says.
This story first appeared in USA Today.