Study shows most Americans have inadequate savings

A recent survey by Bankrate.com shows that millions of American workers are only a paycheck away from financial disaster. A survey of 1,000 adults found that fewer than 25 percent of Americans have six months or more of savings, an amount deemed adequate to prepare for all but the most severe emergencies.

Another 50 percent have less than three months savings and 27 percent have no savings at all, meaning they are living essentially living paycheck to paycheck, with no emergency cushion to fall back on.

The online lender CashNet.com reported that of 1,000 people it recently surveyed, 22 percent had less than $100 saved in case of an emergency. Another 46 percent had less than $800 to cover unexpected expenses. Said Megan Staton, CashNet director of marketing, “The scarcity of rainy day savings remains a concern for too many Americans, and it hasn’t improved since last year.”

These statistics underscore the hollowness of the claim by the Obama administration that the US is experiencing an economic recovery. In fact, the rate at which Americans are saving is falling, after rising briefly in the aftermath of the 2008 financial crisis when it reached a high of 5.5 percent. In 2011, it declined to 4.2 percent and further to 3.9 percent in 2012. For the first quarter of 2013, the savings rate stood at just 2.6 percent. Only 52 percent of families reported saving in 2010 compared to 56.7 percent in 2007.

Stagnant and falling wages and continued high levels of unemployment make it difficult for most families to save. A study by the University of California found that since 2009 average real income for families has grown by only 1.7 percent. But, that includes an 11 percent increase for the top 1 percent. When that is subtracted, real wages declined half a percent for the bottom 99 percent. Read more >>