Majority of Americans Uncomfortable With Their Level of Emergency Savings
A recent Bankrate report found that 57 percent of Americans are uncomfortable with their amount of emergency savings, including one-third of Americans who say they are very uncomfortable. Less than half of Americans—48 percent—have enough to cover a minimum of three month’s worth of expenses, but 22 percent have no emergency savings at all, which is the second lowest level seen in 13 years of polling.
“The economic gyrations over the past 4 years have underscored the importance of having emergency savings, with an increasing share of Americans thinking it will take a bigger savings cushion to feel comfortable with it,” said Greg McBride, CFA, Bankrate’s Chief Financial Analyst. “Nearly 2-in-3 Americans, 64 percent, won’t feel comfortable with their emergency savings until they accumulate at least enough to cover 6 months of expenses, and 88 percent say they’ll need at least three months of expenses saved.”
Only 43 percent of Americans say they are comfortable with their current level of emergency savings, including 15 percent who are very comfortable and 28 percent who are somewhat comfortable. 82 percent of those who are very or somewhat comfortable with their emergency savings have at least three months of expenses saved.
To feel comfortable with their emergency savings, 88 percent say they would need to cover at least three months of expenses, compared to 72 percent in 2019. 64 percent of the former share say they would need enough to cover six months of expenses, 25 percent say they would need to cover three to five months, and 9 percent would need enough to get by, but not enough to cover three months.
Baby boomers are most likely to be comfortable with their level of emergency savings at 56 percent, followed by 38 percent of Gen Xers and 37 percent of millennials. Additionally, 27 percent of millennials have no emergency savings, followed by 22 percent of Gen Xers and 15 percent of baby boomers.
The report also found that among employed Americans, 56 percent contribute to their emergency savings at least monthly, including 29 percent who add to it every paycheck. 18 percent say they add to their emergency savings every couple months, and 8 percent say they add to it once a year
“Successful saving is all about the habit,” said McBride. “Regular contributions such as a direct deposit from your paycheck or an automatic monthly transfer into an online savings account lead to a higher level of emergency savings and greater comfort level with it.”