Some 37% of Americans cannot afford an unexpected expense of over $400, and nearly a quarter (21%) have no emergency savings at all, according to new research by Empower.
“Not all surprises are good, and people know it. The study suggests financial precarity at a time when household finances may be stretched due to rising prices and inflation,” says Rebecca Rickert, head of communications at Empower. “Life happens, and people are stressed about the surprise expenses that could tip them off-balance.”
Many people (25%) used their emergency savings to cover living expenses in the past year. The median emergency savings for Americans is $600. Men tend to have a higher amount saved compared to women, with a median of $1,000 versus $500.
For 62% of people, having dedicated emergency savings is a priority. However, nearly half (47%) say that their regular monthly expenses are too high to allow them to save any money.
The majority of Americans believe that having emergency savings contributes to their financial well-being. Despite economic challenges, nearly half (43%) of Americans have contributed to their rainy-day fund in the past year, and 51% of Baby Boomers have done so as well, although only 14% do so regularly.
It’s worth noting that 34% of Americans believe they could handle any unexpected expenses that might arise.
More key findings:
- Ready or not: Over half (54%) report stressing about paying if and when disaster strikes, with Millennials (60%) worrying the most.
- Feeling the squeeze: Rising prices (57%) are keeping Americans from building up their emergency funds.
- Emergencies of all sizes: Roughly 1 in 5 have had to dip into their funds for car expenses (21%), home repairs (21%), and medical expenses (19%), debt payments (17%), and job loss (10%).
- Debt dilemma: Paying down debt is a higher priority than saving for an emergency for 57% of Americans.
- Cash stash: 30% of adults keep their emergency nest egg in cash and many are using a high-yield savings account to help their money grow (33%).
Visit The Currency™ to read Empower’s full research report, “In Case of Emergency.”