In a few recent polls they found that 62% of Americans have less than $1,000 in their savings accounts and 21% don’t even have a savings account. Many financial experts state you need a lot more money in savings put away for emergencies and retirement. This low of an investment in savings will not cover an emergency and those that come up means people will have to rely on credit, friends and family, or even their retirement accounts.
People faced with an emergency say they would raise the money by reducing spending elsewhere (26%), borrowing from family and/or friends (16%) or using credit cards (12%). According to a U.S. Federal Reserve survey 57% said they’d used some or all of their savings in the Great Recession. The low interest on savings account rates also keeps people from saving.
Only 29% said they have savings above $1,000 with the most common balance of $10,000 or more. One survey said that 9% of people say they keep only enough money in their savings accounts to meet the minimum balance requirements and avoid fees. Bank minimum requirements can vary between $300 a month and $1,500 a month.
Over 31% of Generation X aged 35 to 54 report a savings account balance of zero. Which is surprising because you would expect them to have more money saved up being closer to retirement than millennials, Around 29% of millennials said they have no money in their savings account. Baby boomers and seniors aged 65 and up have the most money saved of any age group. Less than 10% of millennials and approximately 16% of Generation X have $10,000 or more saved.
Reasons that Americans are not putting back money into savings accounts:
The interest payout is nothing to get excited about – There’s little incentive for most potential small savers to put money into bank accounts even if they have some discretionary income. With a rate barely over 1% in most cases for the highest savers the stock market is a better place to invest your money.
Bank fees are penalizing the poorest Americans – Banks remain rather predatory making profits on small accounts charging significant fees.
#YOLO Living for today think without regards for tomorrow. People have a really hard time imagining future issues such as a car breaking down nor what their lives will be like at retirement age.
The inflation rate versus “personal” inflation rate is one major factor. The U.S. inflation rate is virtually flat, but wages are also effectively stagnant. “Most people roll their eyes” when they hear that their salary will go up by 3% this year, he says. The personal rate of inflation is mainly impacted by things such as student debt, job benefits, a child in college or driving a car.
Aggressive lending keeps people in long-term debt