CHICAGO–A new report just reinforces what the recent government shutdown made clear—most American households have little in savings and are unprepared for any financial challenges.
The new study on the state of Americans’ financial health the Center for Financial Services Innovation (CFSI) found the median wealth of U.S. households has yet to return to pre-recession levels, loan defaults are steadily inching upward and credit card debt is nearing an all-time high.
“Total U.S. household debt is now hovering around $13.3 trillion, higher than it was before the financial crisis. Baby Boomers are nearing retirement with a collective savings deficit between $6.8 and $14 trillion,” according to CFSI. “Americans of all ages are buried under $1.52 trillion worth of student loan debt.”
The CFSI’s new research, the U.S. Financial Health Pulse, which was conducted in partnership with the University of Southern California Dornsife Center for Economic and Social Research and Plaid, seeks to provide what it called a “regular drumbeat of data to illuminate how U.S. households are faring financially.”
Among the findings:
- 47% of Americans say their spending equals or exceeds their income. Among respondents who said their spending exceeded their income in the last 12 months, 41% said this was because their spending was unusually high, their income was unusually low, or their spending was unusually high and their income was unusually low; 26% said their spending always exceeds their income, suggesting that this is a permanent state of affairs for millions of Americans.
Among respondents who said their spending exceeded their income in the last 12 months:
- 43% said they used credit to make ends meet.
- 10 (said they drew upon non-retirement savings to make ends meet.
- 36% of Americans are unable to pay all of their bills on time.
Not surprisingly, the CFSI said “Financially Vulnerable Individuals” struggle the most to keep up with their bill payments. Of that group:
- 93% said they were unable to pay all of their bills on time in the last 12 months.
- 87% who received and spent their 2018 tax refunds said they used the money to pay bills.
Overall 45% of Americans say they do not have enough savings to cover at least three months of living expenses, while 42% of respondents said they have no retirement savings.
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