Most Americans on Brink of Financial Disaster
Despite reports of economic recovery, most Americans’ household financial security is anything but secure.
So finds a report released Thursday by Pew Charitable Trusts which looks at three elements of a household balance sheet—income, expenditures and wealth—over the past several decades, and reveals the “financial tightrope” most families are walking.
Most U.S. households—70 percent—face financial strains in at least one of those three areas, the analysis found, with many facing more than one.
Fifty-five percent of all households have a month or less of liquid savings, referring to savings or checking accounts, if a financial emergency struck, while a typical household at the bottom has less than two weeks such savings.
In the case of a financial emergency, many households would turn to any other assets they might have, either liquidating retirement savings or taking on credit card debt. Yet even doing that, the report states, “the typical household could replace only about four months of lost income.”
The report also found that a vast difference in earnings increases across the time studied. Though wage growth for a typical worker was 22 percent from 1979 1999, that growth was just two percent from 1999 to 2009.
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