WASHINGTON—A new study shows Americans are more optimistic about their finances and the economy than they have been in years, but at the same time more than half are not ready for an unexpected financial expense.
A report from the Pew Charitable Trusts indicates that nearly six in 10 Americans say they are unprepared for a financial emergency, and only half say their households are financially secure. Retirement is a major concern, and most Americans report having experienced a financial shock in the previous year.
The new issue brief: "Americans' Financial Security: Perception and Reality," seeks to understand Americans’ attitudes about their financial security. It examines the top-level findings from a nationally representative Pew-commissioned survey of more than 7,000 households and from focus groups convened in three major cities.
Pew stated that the report suggests that more work needs to be done to help encourage families’ economic security today and to chart their path toward economic mobility in the future.
Key study findings:
One in five Americans (21%) say they are not planning to retire. Just 26% have a traditional notion of retirement, in which they stop working altogether. More than half (53%) anticipate doing something else, including working at a different job.
Nine in 10 Americans favor financial stability over upward mobility. When asked whether it was more important to them to have financial stability or to move up the income ladder, 92% of Americans choose security, an increase of 7 percentage points since 2011, Pew stated.
Eight in 10 households (82%) report experiencing a financial shock. Examples include a drop in income, hospital visit, loss of a spouse or partner, or major car or house repair. Of those who report a financial shock, 55% say the setback made it harder for them to make ends meet.
More than half (56%) report worrying about their finances over the past year. The most frequently reported financial worries include lack of savings (83%), not having enough money to cover expenses (71%), and not having enough money to retire (69%), according to the study.