Americans are struggling to save for basic emergencies, let alone retirement.
A recent survey found that a majority of Americans don’t have enough to cover a basic emergency expense. Fifty-five percent said they did not have $500 on cash for an emergency.
The survey of 1,200 U.S. consumers between the ages of 18 and 75 was conducted by Qualtrics on behalf of Varo Money in 2018. The results showed that people of all ages are squeezed when it comes to saving. Here’s a breakdown of the results.
Most Americans have nothing saved
Six in 10 millennials don’t have $500 to cover an emergency expense.
Also one in five millennials currently receives monthly financial assistance from relatives, and more than half don’t have a comprehensive financial plan.
Nearly half of all respondents — 49% — said they saved less than 5% of their income, and a quarter said they are saving nothing at all.
On the bright side, a small group of respondents, 4%, were super-savers, putting away at least 25% of their income. (Which is consistent with the FIRE movement.)
National savings trends
The national saving rate is around 6%, according to Federal Reserve data. This is a substantial dip from 10% in the 1970s.
Financial experts recommend that people save at least 10% to 15% of their income across cash and retirement savings goals.
There are many factors behind the savings crunch — economists have pointed to broader macro trends over the decades in the United States, such as higher costs of living and rising student loan debt, according to the Federal Reserve.
Learn more about why people are saving less.
Other factors are more complicated, like social media. A Varo 2018 survey showed people are more likely to spend money after looking at social media in order to feel better about themselves.
Are savings accounts the missing link?
Almost half of the respondents reported they don’t have a savings account.
Among those who do have a savings account, nearly one-third said they didn’t know the annual percentage yield for that account. Of those who did know their APY, 56% said they are getting less than 1.00% APY. The national average APY on a savings account is 0.09%, according to the FDIC.
Looking to grow your nest egg? Consider a high-interest savings account.
Expectations vs. reality
Though Americans’ saving situation sounds dire, the reality isn’t crimping people’s dreams of retirement.
Most respondents said they plan to retire by 60, and many said they expect to live into their 80s and 90s.
Expectations may not meet reality, however. More than one-third of millennials without $500 in emergency cash still say they plan to retire by 60, and despite their current situation, nearly a third of millennials assume they’ll be living on $100,000 a year when they do retire.
This is a concerning trend, even for those with nothing saved so far. One in five people who said they have no money saved still think they could retire by age 50 or younger.
Only 24% think saving for retirement is the most important money goal to work toward.
Tech is making it easier
Tech is already helping Americans save. Four out of ten people say they haven’t even set foot in a bank in the last six months, thanks to online banks and apps. Meanwhile, 69% of people said tech has made it easier or the same to manage their finances.
Americans are living longer and need more money to last through retirement. To help you get financially ready, here’s how to budget to live to 100.
This article originally appeared on Varo.
Image: Matthew Bennett