Are Americans Having a Savings Crisis?

Author: Lucas LaChance, CPA, CIA and Director of Practice Growth at LGT
 

Two major studies were released this week that cast a dark shadow across what generally has been a sunny outlook on the strengthening economy.

 
 
 

According to a study by Bankrate.com, approximately 30 percent of Americans have little or no personal emergency savings. Additionally, almost 20 percent of US households have less than 3 months’ worth in savings. Combined, this equates to half of Americans who simply do not have enough cash on hand to avert a crisis, let alone find enough cash to replace a major appliance or fix their vehicles without incurring more high-rate credit card debt. These results are the highest levels of unpreparedness in the last five years, according to Bankrate.com. The likely culprit is slow income growth, despite the increasing stock market.
 
Given those results from Bankrate.com, it doesn’t come as quite a shock to review the results of an unrelated study done by the AICPA indicating that more than 50 percent of US adults surveyed are putting off milestone life goals like buying a house, pursuing additional higher education or retiring. The percentage is a sharp increase from a similar study conducted in 2007 where only 31 percent of respondents were delaying milestone events. When asked why the major decisions were placed on the back burner, the most frequent answer was a lack of savings, according to 60 percent of respondents. Other concerns included worrying about the economy, difficulty paying medical and nonmortgage bills, and taking care of elderly parents and relatives.
 
Sources:
http://www.nbcnews.com/business/personal-finance/three-10-americans-have-no-savings-says-survey-n379946
http://www.journalofaccountancy.com/news/2015/jun/americans-delaying-major-life-decisions-201512549.html
 
The services of a legal or tax advisor should be sought before implementing any ideas contained in this blog. To reach a financial advisor at Lane Gorman Trubitt, PLLC, call 214.871.7500 or email at askus@lgt-cpa.com.