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A government report indicates that almost a third of adults in the country are barely making it from paycheck to paycheck. Even though the recession was declared over seven years ago and unemployment is at its lowest rate since 2007, 31 percent of Americans (76 million people) are still struggling financially, trying to get by with minimal emergency funds, savings for retirement and burdened with student loan debt.
That is the good news! Two years before, the federal government reported that 38 percent were barely making it. The improvement is small consolation for those who have seen their income stagnate or drop while prices for food, medical care, college and other day-to-day expenses kept rising, which is why the economy is a top voter concern this election year.
The “Report on the Economic Well-Being of U.S. Households in 2015” issued by the Federal Reserve Board is the government’s annual pulse check on the economic status of American consumers and look at their struggling and successes in the economy. Established three years ago, the Fed report is based on a Survey of Household Economics and Decision making (SHED), conducted each fall starting in 2013. Topics in the SHED include income and savings behaviors, access to banking and credit, economic preparedness, decisions about housing, vehicle purchases, education and student loans, as well as savings for retirement.
One concern raised in the Fed survey data is that half the country would have trouble financially handling an unexpected car repair or plumbing problem. Emergency savings is nonexistent for many adults. Forty-six percent of respondents indicated that they either could not cover a $400 emergency expense without having to selling something, borrow money or charge it. Twenty-two percent incurred an unexpected, major medical expenditure the previous year that had to be paid out of pocket, and nearly half of them (46 percent) still owe money from that expense.
If a large bill is an issue, it also indicates that, while unemployment be done, many people could not sustain a financial disruption, such as a job loss. Additionally, 22 percent of those respondents who are employed reported that they are either working multiple jobs and/or earn money from side efforts, freelancing, eBay or other means to supplement their income.
Student loan debt continues to weigh on many too. Over half of adults under age 30 who attended college took on some debt while pursuing their education. The likelihood of falling behind in paying off students varies depending on the type of institution attended and what was studied. Countless Americans who attended a for-profit institution are struggling to pay off large debts in positions, even if in the industry they sought, do not pay enough to cover the debt. According to the Fed report, 21 percent of those who incurred student loan debt to attend a for-profit institution are behind on their payments. Conversely, only 7 percent and 5 percent who borrowed to finance studies at a public or not-for-profit institution, respectively, are late on their payments.
The educational debt for all young adults is not just in the form of student loans. The survey indicated that 21 percent who have education-related debt owe money on credit cards related to their studies. The median credit card balance is $3,000 for education-related costs.
While the “Report on the Economic Well-Being” indicated that 31 percent of American adults are struggling to get by, the flip side is that 69 percent claim that they are either “living comfortably” or “doing okay.” That positive outlook also corresponds to the amount of non-retired respondent who have some retirement savings. Thirty-one percent, probably a large overlap of those struggling to make ends meet, do not.
Written and Edited by Dyanne Weiss
Federal Reserve: Report on the Economic Well-Being of U.S. Households in 2015
Money: 76 million Americans are struggling financially or just getting by
Forbes: 76 Million Americans Are Struggling Financially: And It Doesn’t Matter A Darn
Photo courtesy of Stephen Depolo’s Flickr Page – Creative Commons license