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62% of Americans Have Under $1,000 in Savings, Survey Finds

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Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#121

Post by abritinthebay »

And people wonder why they say Tech is out of touch. Reading the comments here is a great demonstration.

Examples:

> who uses savings accounts anymore?

> Cash on hand or it's invested in stocks, bonds and my home.

> The truth is you're losing more money by not having any of it generating higher potential yields.

> the total net worth of my wife and me is many orders of magnitude greater than what our savings account reflects

These kind of statements just show that the audience here is woefully out of touch with the average person.

The average person in the US is unable to absorb a $1000 emergency. The average person in the US avoids going to the doctor because they can't afford it. The average person in the US doesn't have enough money to justify an investment account of any kind.

But we in tech are privileged and goddamnit if we're not mostly (as a group) utterly blind to it... or worse - in denial that we are (and aggressively defensive about it).

The median household income in the US is $51,939 the median individual income in the US is $28,567. Note: median, not mean. That is the financial reality of the average american.

In tech we're used to making 6 figures and then bitching that other people aren't trying hard enough. We quibble over what "in savings" means. We try our hardest to minimize problems that we ourselves don't experience rather than work on the very real, very clear, issues at hand. This feels like we have a maturity and empathy problem as an industry to me...

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#123

Post by derekp7 »

deckard1 wrote: post #43
patio11 wrote: post #5

There's a conversation to be had about many Americans living in precarious financial situations, but the reason why most Americans don't currently view their savings accounts as priorities is because in the current interest rate environment savings accounts and CDs are products with vanishingly little to recommend them. The APY my bank offers is one basis point . That's $1 per year for every $10k held in the account.…

I don't think that's the case here at all. You're talking about people that are both savvy enough to have a savings account and familiar enough with investments to know that a savings account is bad compared to other investments. On top of also knowing another place to put their money (many people completely fear the stock market and all index products). The average American is just not sophisticated at all here. We'…

But the balance for those not sophisticated enough to invest on their own is 401k. And many jobs [citation needed] (at least the ones I've been at) automatically start you off at 3% contribution, and they will automatically increase it by 1% every year (up to 6%), coinciding with your raises, if you do not tell them to do otherwise. Plus, they will put it in a target fund based on your estimated retirement age (ex. 2035 fund) that starts off aggressive, then gets more conservative when you get closer to that year. So it is mostly foolproof for the average person (although not the best possible returns for them).

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#124

Post by pyrrhotech »

nostromo wrote: post #10
patio11 wrote: post #5

There's a conversation to be had about many Americans living in precarious financial situations, but the reason why most Americans don't currently view their savings accounts as priorities is because in the current interest rate environment savings accounts and CDs are products with vanishingly little to recommend them. The APY my bank offers is one basis point . That's $1 per year for every $10k held in the account.…

Also, the article title is very different than the actual survey question: > How much money do you have saved your savings account ? That's a very specific question. A person with $5k in their checking account or a person with $100k in a retirement account might still answer that they have no savings.

Agreed, I'd answer $0 because I don't have a savings account. Even if they asked in all bank accounts, it would be about $1500 or less depending on the day of the week. Yet I own a home with 50% equity, a car and have a 6 figure retirement account and separate 6 figure taxable account. What they really should ask is what is your net worth or at least what is your liquid net worth, but I suppose that would be confusing to a lot of Americans.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#125

Post by refurb »

ryandrake wrote: post #69
tootie wrote: post #34

Earlier quoted context omitted.

My net worth is probably top 5% or so and I haven't even had an open savings account in 10 years. Cash on hand or it's invested in stocks, bonds and my home.

Curious, not criticizing: What is your plan if you get sick or laid off, or for some other reason need a large amount of cash immediately? I always thought it was common advice to keep ~6mo living expenses in cash savings for emergencies.

Get a $30K line of credit with your bank. Don't touch it unless there is an emergency.

Borrow when you need it, then you have some time to figure out what assets to sell to pay it back.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#126

Post by ultramancool »

jellicle wrote: post #49
manigandham wrote: post #31

Earlier quoted context omitted.

How does not including other vehicles help give an accurate picture of "savings"?

The vast majority of the population is not saying "I have nothing in savings" because all their money is tied up in yachts and Manhattan real estate; it's because they have no money.

Or it's because it's in investment or retirement accounts.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#127

Post by ryandrake »

mod wrote: post #95
ryandrake wrote: post #62

Earlier quoted context omitted.

But, surely anyone with over, say, $10,000 in total savings/investments has at least $1,000 (10%) of it in some kind of cash account. Why on earth would one keep all of their assets in accounts that could lose value?

The point is that checking account != savings account.

Sorry, I meant "cash savings" account.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#128

Post by refurb »

Spooky23 wrote: post #26
patio11 wrote: post #5

There's a conversation to be had about many Americans living in precarious financial situations, but the reason why most Americans don't currently view their savings accounts as priorities is because in the current interest rate environment savings accounts and CDs are products with vanishingly little to recommend them. The APY my bank offers is one basis point . That's $1 per year for every $10k held in the account.…

If you need liquid savings, cash is king. I opened a savings account with my son a few weeks ago. In my day, those accounts paid 3-7%. There was a story of compounding interest to tell. Now, I feel like I'm teaching my kid to be a sucker.

But what was your real interest rate when they were paying 3-7% in interest?

Back in the 1970's savings accounts were paying 15%+. However, inflation was double digits as well. You'd be lucky if your real interest rate was more than a few percent.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#129

Post by bmj »

wil421 wrote: post #84
cvburgess wrote: post #57

Earlier quoted context omitted.

Reposting my comment to another commenter: A 40 is not liquid - if something happens and you need money tomorrow yo don't have immediate access to those funds. There may also be heavy fees if you pull funds out before you are 60.

That is true but why should I let the bank make all the money off my savings? If I were to lose my job today I could easily find a bartending job like I did in college to support myself in the time it takes to find a new job. My situation may be different than a lot of people and I live in a large city. If I had 15k in savings to buy a house in two years I could put 10k into a CD and still make something like $300. T…

f I were to lose my job today I could easily find a bartending job like I did in college to support myself in the time it takes to find a new job. My situation may be different than a lot of people and I live in a large city.

This is not an option for a lot of people, particularly those with families.

That said, your follow-up makes sense, and I've typically done something similar.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#130

Post by KirinDave »

The US financial industry has been consistently reducing the value of consumer savings accounts. Their interest is poor, their rules are arcane, they're awkward to work with, and they're often oversold as a feature to consumers who neither need nor want them.

In many institutions, interest bearing checking accounts with sufficient minimum balances deliver HIGHER returns than savings accounts for the same balances. In most cases, the march of inflation means your savings account is a pretty depressing way to LOSE money over time.

The savings account is a legacy product from an entirely different era in the American banking system. For the most part, consumers realize this and avoid them.

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