In a heartbreaking report, the media outlet MarketWatch has illustrated just how serious the current economic situation is from the majority of the American public and the fact the many would suffer from financial ruin if they ran into an unexpected emergency bill.
MarketWatch explains that while 2016 may appear to be starting with more job security for Americans, the frightening reality is that an estimated 63% would be unable to manage emergencies such as unexpected car repair or an emergency room visit.
According to the report, Bankrate.com asked 1000 individuals participating in a recent survey if they believe they would be able to handle a minor financial emergency ranging from $500 to $1000, sadly, the results appear grim.
Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).
This lack of emergency savings could be a problem for millions of Americans. More than four in 10 Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who had an unexpected expense, Bankrate found. (The survey didnt specify the impact of that expense.) Without emergency savings, you may not have money to cover needed home repairs, says Signe-Mary McKernan, senior fellow and economist at the Urban Institute, a nonprofit organization that focuses on social and economic policy. Similarly, without emergency savings, people could raid their retirement account.
The findings are strikingly similar to two other reports, one by the U.S. Federal Reserve survey of more than 4,000 adults released in 2014. Savings are depleted for many households after the recession, it found. Among those who had savings prior to 2008, 57% said theyd used up some or all of their savings in the Great Recession and its aftermath. And another survey of 1,000 adults released last year by personal finance website GOBankingRates.com found that most Americans (62%) have less than $1,000 in their savings account (although that doesnt include retirement or other investment accounts).