A Third of Americans Have No Savings for Emergencies

Far too many of us have no savings, or inadequate savings, for a financial crisis.

Broken piggy bank

Our political and economic leaders have encouraged a culture of spending, as if that was the key to economic growth. They have encouraged consumer debt and consumers have mostly fallen for their message. Thus, the present mess we are in.

CNBC reports, “Look who’s living on the financial edge.”

According to a newly released report from Bankrate, 24 percent of Americans have more credit card debt than emergency savings, and 13 percent are not much better off—they don’t have credit card debt but they don’t have emergency savings either. Put another way, more than a third of Americans are living at risk of a financial crisis.

“Americans are woefully undersaved for emergencies,” said Greg McBride, chief financial analyst at Bankrate. “By not having emergency savings and using some of your available credit, your options in the event of unplanned expenses are much more limited.”

Generation X is the group shortest on emergency savings, Bankrate found, largely because they are in an expensive stage of life. Some 32 percent of respondents aged 30 to 49 had more credit card debt than emergency savings.

“They’ve got the two kids, the dog, the car payments, the mortgage payments, the tuition payments,” McBride said. “They are the poster children for stretched budgets.”

Millennials are in relatively better shape, with just 21 percent of respondents between 18 and 29 having more credit card debt than emergency savings. Perhaps that is because they have not hit the high-spending years and perhaps, as McBride said, “You are looking at a generation that had a front row seat for the financial crisis, so they have a greater tendency to save ingrained in them.”

[See also, “Families Unable to Cope with Financial Crisis.”]

The only group that seems to have savings that are somewhat adequate is retirees. Most of them reported that their emergency fund is bigger than their debt load.

But they are a small part of the population!

And, while current retirees may be OK, what about future retirees?

According to the Employee Benefit Research Institute’s 2014 Retirement Confidence Survey, 60 percent of workers have less than $25,000 in savings and investments, and 36 percent have less than $1,000—up from 28 percent in 2013.

Many of us, it seems, must never retire. We will be forced to find some way to keep working.