57% of Americans Have Less Than $1,000 in Savings (2017) | Hacker News Reader

57% of Americans Have Less Than $1,000 in Savings (2017)

gobankingrates.com

71 pointshelloworld98 comments

46% of people hold no investments. [0] 57% of Americans don't have enough savings to cover a 500 dollar expense. [1] Nearly half have no retirement savings, which pushes the median retirement savings in the US to 5,000 dollars [2]. Additionally, for families with retirement savings, the median amount of 60,000 dollars. [2]

It's not how they asked the question, it's not about savings account rates being low. Most people don't save. Most people are not prepared for retirement.

0. http://money.cnn.com/2017/10/20/investing/trump-stock-market...

1. https://www.cbsnews.com/news/most-americans-cant-afford-a-50...

2. https://www.cnbc.com/2017/06/13/heres-how-many-americans-hav...

I can't help but feel like you're making a value judgement against certain individuals. That combined with looking over your comment history makes me feel like you're unsympathetic to individuals in situations that are less than ideal.

Some people have cancer and don't have health care. Some people have kids. Some people live in the Midwest have absolutely must have a car to get to work and have higher than average heating and cooling bills. Some people got arrested for having marijuana and now they have a hard time getting a job. Some people are supporting a parent who isn't self-sufficient. Some people are supporting a spouse who has substance abuse issues. Life happens to people.

Other countries have found a way for providing a high standard of living without a need to put the onus for saving onto the individual. I'm not saying this here to say it's the responsibility of the state to provide a comfortable retirement for individuals. But knowing that we could, in not some too unimaginable world provide a comfortable retirement and safety net for each individual, what are our reasons for not doing so? What is it in you that feels like the burden of life must be foisted upon individuals with lesser means or an inability to provide for themselves rather than a distributing that responsibility upon everyone?

You have drawn a lot of incorrect conclusions about my personal opinions. If you have the time to point out any value judgements I have made, or previous comments that were in poor taste, please do.

My OP comment was stating facts and refuting people who were questioning the validity of the survey. I'm not sure where you would draw any conclusions about my personal opinions from it.

>What is it in you that feels like the burden of life must be foisted upon individuals with lesser means or an inability to provide for themselves rather than a distributing that responsibility upon everyone?

Nothing in me feels that way. Thanks.

Dont forget!

https://apnews.com/9309128222ab4c4f92b0d0022e1ec133/In-shado...

The Hoovervilles are back. Maybe we should just call them Trumpvilles now.

When your business does not pay the workers enough to survive, do the job, and have a roof over their heads that isn't just that of a car? I think we know who the real leech upon this world is. Hint: not the guy tightning his belt by sleeping in his car.

"Savings? People have to think about what they'll do with extra money?! Brother, I'm just trying to find my next meal." -Average American in 5 years.

Trying to place the blame for this on Republicans is dishonest. Shantytowns have existed for years, and Democrats haven't done much to help. For example:

> In December 2014, the city of San Jose shut down what was then America’s largest homeless camp — a shantytown that stretched for sixty-eight acres along Coyote Creek where a few hundred men and women were living in tents, shacks, treehouses, and adobe dugouts.

https://placesjournal.org/article/tent-city-america/

Hoover could have, with some justification, claimed that the term "Hooverville" was unfair when the situation was hardly of his own making, and yet he got stuck with it. Ultimately the buck has to stop somewhere.

I can't tell if the conversation here is just being pointlessly pedantic or if they are simply out of touch with how many people lower on the socio-economic scale are living. For a variety of reasons living paycheck to paycheck has become the norm.

The U.S. median income is $59,000. There’s no reason if you’re making that much money to not have $500 saved up, so by definition of median at least 50% of Americans should have some kind of emergency fund... I’ve made less money than that and still had money saved up.

Some people go to college and be indebted and come out with no job or one that doesn't pay enough to pay off their debt. Some people NEED a car to get anywhere with America's car culture. Some people get sick or know someone who gets sick. Some people need to support others not their own kids but a family member. Some have disabilities whether it be physical or mental.

Have some empathy, try to see that your life is not that of another and people aren't just "lazy to save" or "spend too much". The sooner people realize America's systems and institutions need A LOT of work, the better it is for your country.

The constant touting of "I did this, it was easy, why can't you? Stop being stupid." helps nobody at all and just shows how self absorbed American culture is. Looking down at others to make themselves feel good is not evolved and as an outsider looking into American culture, I always wonder what makes America this way?

Is it the celebrity culture? Other countries have this but not to the extent of the US. You have people who are rich and famous - for being rich and famous... And they are praised by millions in your country. I'd rather be in a country where the majority can live a decent life no matter their situation and the culture of showing off your riches is actually frowned upon socially.

The "some" here is representing 57% of the population. While the proportion without savings is probably correlated with income, there are people making six figures with no money saved. According to some sources, nearly half of people making $100,000 to $150,000 have less than $1,000 saved up. 18% of these people have nothing saved up [0]

This isn't about having empathy (hell my family regularly asks for "loans" that never get paid back so they can make rent and mortgage payments), it's about people not taking responsibility. If you're making six figures, I can't imagine what the excuse is for not having an emergency fund.

0: Make Six Figures? There's a Decent Chance You've Got Almost Nothing in the Bank https://bloom.bg/2cQ97hN

There is a lot of back-and-forth on this issue, but honestly I think simultaneously both positions are true: people are not making enough money and are in precarious, difficult financial situations. But many also do not use their money wisely. For many people it's not an either-or but rather both things are true.

That's the figure for the median household income. That means that many people "in the middle" are making 59k between 2 people and probably several kids.

The average household contains 2.54 people for 2017. Remember that households also includes things like roommates, cohabiting couples, and adult children living in the basement. The idea of an average household having 2 parents and several kids ended around 1973 [0], assuming that back when households had around an average of 3 occupants it was due to the so called "atomic family."

0: https://www.statista.com/statistics/183648/average-size-of-h...

So $23k per person per year. That's absolutely nothing.

Being poor is being preached at by Silicon Valley know-it-alls about how you're not saving enough of your not-big-enough paycheck.

That's totally dependent on cost of living and many are making less than that.

Median income generally increases in areas with a high cost of living. In the San Francisco Bay Area the three largest cities and counties have median income going from $87,000 to $103,000.

Cool, so half of your people are above 87-103k, the other half are good and properly fucked in that situation.

Maybe when we're talking about the bottom 10% or 20% I'll care less but having lived in that situation where even one major would have wiped us out I think it's a pretty serious problem that's often overlooked or blamed away.

I'm doing fine now(yay getting out of gamedev) but I'm always shocked how few of my coworkers are aware that most people are just scraping by.

https://apnews.com/9309128222ab4c4f92b0d0022e1ec133/In-shado...

Oh look, a news story about people with full-time jobs having to sleep in cars.

Even with $100k in SF, it can be tough to save with a family. Let's do some math. Taxes are about 25%, so you're down to $75k right off the bat. Median rent in SF is $3880, so that's $46560 a year on rent. We're down to $28k. Last year I spent $11k on student loans, between me and my wife, and we're down to $17k. $1700 on electricity and internet: $15k. Car payment and gas was $3k, down to $12k. We're left with $1000 a month for food, clothing, and everything else in one of the most expensive cities in the US, a city where a hamburger can easily cost $20. That doesn't go very far at all. Add in the medical debt I have, and I was pretty much broke at the end of each month.

Oh this is easy:

1. Go back in time and don't go to college

2. Get roommates

3. Don't have internet. Ration electricity.

4. Sell your car and steal a bike.

5. Don't eat.

and finally, move to Montana where your dollar goes further. This all seems to be relatively in the ballpark of what's commonly suggested when people on here rightly complain about CoL.

Short version, join Mennonites or Amish?

Re: sibling comment, citing high wages in SF as evidence that cost of living pushes up wages is getting the direction of causation at least 50% wrong.

You might equally say that owning a Rolex increases your income, since it seems most people who have one make a lot of money.

> There’s no reason if you’re making that much money to not have $500 saved up

That's a pretty hard comment to digest. There are a plethora of reasons that could prevent people in a low income bracket to save that sort of money.

Come over here to Sydney and let's see how well you live on that $59k. Your post is far too broad.

Stop buying coffee and avocado then and start buying a house... Sheesh!

I suspect the audience here on Hacker News aren't familiar with your reference, hence the down votes.

Millionaire tells millennials to stop buying avocado on toast [to save $150,000 for a deposit on a house): https://www.theguardian.com/lifeandstyle/2017/may/15/austral...

The OP specifically mentions the U.S. In the U.S. as cost of living increases, so does median income. New York City and the SF Bay Area have median incomes that are tens of thousands dollars higher than the U.S. median income.

When was that? Should we adjust for inflation? How has the cost of housing changed? What additional monthly expenses have emerged as necessary to participate in society?

Yes. Median. Meaning half of people are below that level that you found no reason to leave, ya lazy bum.

The 46% without investments is not surprising. In addition to people with low income, I had plenty of friends who never invested until their 30s despite having a great income.

A significant percent of individuals who don't have savings, I believe is due to poor financial choices: spending more than what they earn, buying too many unnecessary things, financing to buy a new car, buy a big home... the list goes on. Sure thing, some people have extraordinary bills because they have to support people other than their kids or have a medical situation. But I doubt it's the majority of it.

I think you're value judging a lot of people without cause. Parental wealth is a huge factor as well, my parents are terrible at saving and basically paid for nothing directly for me (despite both having high payingish jobs) but thankfully their spending bought me into good opportunities. Now I loan them money, and when they repay it I put it into a savings account for them (crazy, I know).

Meanwhile my wife's parents are good savers and investors and paid for all her education, her first car, started her a significant investment account, etc.

Unless you think the sins of the parent should be visited on their children, pause and consider your judgements.

I don't think this survey says what they think it says.

"Methodology: This GOBankingRates.com survey posed the question, “How much money do you have saved in your savings account?” to 8,131 people among all 50 states and Washington, D.C. Responses were collected through a Google Consumer Survey conducted from Aug. 15, 2017, to Aug. 17, 2017, and responses are representative of the U.S. online population." [1]

This shows that a lot of people don't have saving accounts. Not that they don't have any savings. For example, they could keep their savings in a checking or money market account. Or as cash.

[1] https://www.gobankingrates.com/saving-money/americans-saving...

Agreed, this seems like a disingenuous headline. There are much better surveys that attempt to tackle how much liquidity people have. One I remember from a while back: https://www.washingtonpost.com/news/wonk/wp/2016/05/25/the-s...

While it asks the question in a better way, it does actually come up with similar results.

Or in their Bitcoin wallet. I hear it's great for the unbanked.

How does an unbanked person comply with KYC?

You don't need KYC if you want to perform a peer-to-peer transaction. Its only exchanges which convert USD/BTC which require KYC

"Savings account" however is commonly interpreted as including things like a stock market account, and therefore include most investments.

It would not include housing equity and pension savings, but it would include more than just an actual savings account.

Depending on what an expression “obviously means” is how you get unhelpful answers and misinterpretations of the question.

They should have phrased it in multiple ways to clarify what they were asking eg “do you have $1000 ready to spend without incurring further debt? Include checking accounts, savings accounts, money market mutual funds, and any other financial account from which you could withdraw $1000 without penalty within one business day.”

Edit: if you ask me about my “savings account”, I’m going to answer about “things that are explicitly called by the name ‘savings accounts’.” (It’s hard to infer intent without context.) If they want to know about my “[liquid] savings”, they should say that, not some other term of art with a technical meaning.

> "Savings account" however is commonly interpreted as including things like a stock market account, and therefore include most investments.

It is? If posed that question I would've responded like the GP suggested and only thought about what is in the bank account that's called a "savings account" and ignored any investments.

Are you sure that most people would interpret "savings account" to include checking accounts, gold bars stashed under their bed, Schwab accounts, etc? I'm not.

A stock market account would be a brokerage account, and that is very different (practically and legally) from a savings account. For one, a savings account is insured by the FDIC, a brokerage account is not.

Well, for purposes of this question, it would make sense to include the cash in brokerage accounts (along with checking accounts), since that’s very liquid and accessible, and is insured through SIPC:

https://www.sipc.org/for-investors/what-sipc-protects

Varying interpretations of the question cast hopeless doubt on their data & conclusions.

This is very misleading. The question is phrased “How much money do you have saved in your savings account?”

I only have checking and investment accounts.

My credit union requires a savings account and I'm sure a lot of people only have the required $5 in it.

> However, the percentage of people with $0 in savings has climbed to 39 percent from 34 percent in 2016.

When savings accounts are yielding 0.02%, what's the point? Might as well keep it in checking or an actual investment.

The people without savings aren't holding all their money in stocks. 46% of people hold no investments. [0] I'm betting there is a large intersection between that 46% and the 39% with no savings.

0. http://money.cnn.com/2017/10/20/investing/trump-stock-market...

The parent listed checking accounts, not just stocks, as the alternative, and the former are widely used.

You can get 1.35% currently with the free online account at Ally (no affiliation). Still below inflation but much better than 0.02%.

Reliable access to a computer or smartphone can be an issue for the really poor but most should be fine.

1%+ APY savings accounts are commonly available outside of the mega bank world. Online banks (which are real FDIC insured banks that just don't have the overhead of national chains and all their branches) and credit unions have competitive rates.

https://www.doctorofcredit.com/high-interest-savings-to-get/

When I opened up my first bank account, a checking account, a mail theft ring operating at my college stole the ATM card and drained the account. It took a couple of weeks before the bank refunded my account, but that's only because there was ATM footage of the fraudulent withdrawal. Under different circumstances it might have taken much longer to get the money back, if at all.

To this day I always keep a savings account with enough money to cover emergency short-term expenses, and to accumulate funds for large, non-deferrable expenses like property or income taxes that I couldn't easily put on a credit card. Importantly this account is not linked to my checking account for overdraft protection, nor permits ACH withdrawals.

I learned later in life that savvy banking customers (e.g. financial professionals) will create multiple, special purpose accounts with various withdrawal and deposit limits precisely to minimize the risk of fraud, mishaps, etc. But a simple unlinked savings account works well for most people.

I wonder how many americans can't afford their cell phone if they had to buy it all up front.

Maybe they'd find other smartphone than iPhoneX for their budget. E.g. BLUBOO Maya (5.5" 1280x720 Curved Glass IPS, MT6580, 2GB RAM, 16GB Flash plus MicroSD slot, 13MP plus 8MP Sony IMX219, 3000mAh battery, GSM plus WCDMA, Android 6.0, $63)

2 Full versions of android behind, 18 months old and unlikely to get necessary security updates. Not enough memory or internal storage to run many apps thanks to the "developers are expensive, hardware is cheap" mentality we see so much of around here.

Lenovo Moto M (5.5" FullHD with 10-point multitouch, 8-core Helio P15 plus Mali T860MP2, 4GB RAM, 32GB Flash plus MicroSD slot, 8MP plus 16MP, 4G, OTG, Android 7.0, 3000mAh battery, fingerprint scanner, $139)

Much better, still 18 months old though, how long will it get software updates?

Okay, iPhoneX, $1000.

Look around - this is why so many people have phones with cracked screens. They can’t afford the repair cost, let alone the phone.

I had a crack on my windshield for years, and two cracks on my house windows. I did not fix them not because I cannot afford it but because they did not bother me that much and it took time to find a contractor to do the work.

Won't your car insurance repair the windshield crack for free?

Deductibles are not free on most policies, and not everyone carries comprehensive insurance on their vehicles, especially if they’re worth less than $6000 or so.

Windshield coverage on an auto insurance plan generally has no deductible. Chips, cracks and full replacement has always been covered for me with no additional cost beyond the $5 or $10 extra a month to have it on my plan. They negotiated and paid in full for a windshield replacement technician to drive 200 miles round trip to my location a few months ago and do a several hour replacement. Definitely worthwhile in certain areas prone to frequent windshield damage.

Windshield repairs are usually free, with insurance paying the full amount, if you use a provider of their choice (in emergency situations, any provider).

Repair saves them a lot of money versus replacement.

Credit Card Magic!

Fortunately, it's taken care of for them. https://www.washingtontimes.com/news/2017/jun/29/obamaphone-...

This article highlights what not to do, but how much is a sensible amount to have in savings, not including a tax-sheltered retirement account? $10K, $30K, $50K, $100K?

I've heard in the past that you should have 6 months to a year worth of living expenses stored up that you can access quickly, but you also have to factor in your age, current economic conditions, and your tolerance for risk. Any thoughts on this?

6 months minimum, more depending on how risk adverse you are. I keep a year of expenses in high yield savings after living through the 2008 global financial crisis (money market fund with my emergency fund broke $1 NAV, withdrawals temporarily halted at the same time I was laid off when my employer folded). Use a savings account. The funds must be liquid.

Just curious, what sort of APY does "high yield savings" get you nowadays?

1.3% to 1.7% in most cases, but it's been climbing over the past 6 months.

Not a lot, but better than the laughable 0.05% some megabanks offer.

I still live with my parents and work part-time, and I have come to be obsessed about saving. While I don't have much in savings, I tend to save nearly everything, unless it's for a necessity. I do hope the latter is not the case when I have a professional job. I am thinking about how everyone talks about investing towards your retirement, savings, etc, and it sounds a bit depressing. 10k signing bonus? Go buy that mint 1986 BMW 528e. I suppose I am just trying to get some perspective. What do people tend to do with most of their income? If they are saving more, are they worse off in regards to the so-called good life? I suppose there must be a balance. There's that word again: "balance".

The real problem here is that the accrual things bringing happiness take time (art, side projects, friends, family) and this is incompatible with income maximization (therefore savings maximization) on fundamental level. If it is just discretionary "comfort" spending perhaps you could rethink why are you doing it.

Savings essentially work like a buffer and can be used to supplement a pension. How much buffer you can hold and afford depends on many expenses.

Many people are unable to even trade time for these things as their jobs which are full time pay too little - barely subsistence.

Telling them to save more or switch jobs is not the solution. (I bet they would of they could)

6 months expenses is a reasonable baseline for a lot of people strictly as an emergency fund in the event of job loss, sudden automotive or medical emergencies, or any other unplanned scenario that might otherwise put you into debt without the emergency fund.

If you're in a very secure career that is highly likely to weather a recession, less might be appropriate. If you're in an unstable career or freelance, more might be appropriate.

Money for short and mid-term savings goals should also be in something safe like a savings account, CD, or possibly bonds. Money you plan to use in under 3 to 5 years should generally not be invested in the stock market.

The ultimate goal is 25x your annual spending, including a tax-sheltered retirement account - that's f-you money.

Until you get there, 6 months to a year. Or for maximum safety, however much you'd need to pay for expenses and max out your annual medical + home insurance deductibles until you could find a new job. This covers the worst-case scenario of job loss + medical emergency + house burning down.

Why 25?

For a longer version: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

tl;dr You can generally withdraw 4% of your investments on average every year taking into account gains and inflation Assuming you're invested in a broad-based portfolio of stocks, bonds and real-estate. So if you have 25x your annual spending invested, there is a high likelihood of being able to live off just investment returns in perpetuity.

Maybe the assumption is that you can earn 4% pretty easily on it and live on that.

At least a year, IMO. 2 years is a better goal, but then again, I'm a pretty risk-averse person when it comes to being able to pay my bills in an emergency situation.

A year if you're debt-free, two or more if you're paying off debts, seems reasonable to me. Ideally, you should be aiming for f-you money.

"<1K in savings" often applies to people with substantial and ongoing access to funds explicitly supporting what would otherwise be out of pocket expenses, like rent, food for one's children, utilities, cell phone service, education, etc.

Well, last time this was posted, 69% had less than $1000: https://news.ycombinator.com/item?id=12548610

So I guess things are getting better?

It would be good to break it by the city as well. I'd expect cities with higher rent to naturally have higher percentage of people without savings.

Savings accounts are not a popular way to save.

Do they really only mean bank savings accounts?

I have exactly $0 in savings but tons of money in mutual funds and stocks and bonds.

>survey posed the question, “How much money do you have saved in your savings account?”

Well, then clearly it was either designed with an agenda in mind or the person who wrote it doesn’t really understand how people save.

I think a lot of people may save that way. My mother's side of the family is generations of family farms. A savings account, checking account, and the value of the farm -- no stocks, bonds, etc. I know a lot of blue collar workers who a in similar positions (minus the value of a farm).

As has been pointed out, in the past here on HN, maybe high schools should teach a class on personal finance. Maybe a lot of these people never think of anything outside of checking and savings accounts and think other sorts of investments ar eonly for the rich.

You might want to consider having some money in a more liquid account than a brokerage account. Generally it takes days to sell/settle/withdraw from a brokerage account. Is that OK if you're experiencing an emergency which requires cashing out from there?

I keep about 10-20k in checking for those purposes. And that’s really only if a credit card is not acceptable. I have over $120k credit available between all my cards.

bingo. the most popular savings vehicle for americans is probably the equity in their home

That’s not liquid though.

I would assume that they meant some sort of liquid asset that you could use, if they didn’t actually mean a literal savings account. So you could include spare money sitting in their checking account or a few other things… But not equity in their home.

Home equity loans and lines of credit turn that liquid.

Not really. They still require several days to shop/negotiate/sign, at least as far as I've seen. True, it's 'more liquid' than raw equity, but it's still slow as shit in an emergency.

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