Two-fifths of baby boomers and Generation X Americans lack a simple savings account, a new survey finds, underscoring a rising sense of economic ennui at a time of reduced saving and rising debt.
In a survey by Achieve, a digital personal finance company, 58 percent of respondents said they aren’t close to achieving financial freedom, defined as living comfortably and without debt or money fears.
Only 60 percent of respondents said they have a savings account in a bank: 58 percent of Gen Zers, 61 percent of millennials, 57 percent of Gen Xers and 62 percent of baby boomers. Among those with savings, more than one-third said the account holds less than $1,000.
The survey covered 1,000 adult consumers, balanced for age, gender, race and ethnicity.
Americans are saving less now than at almost any time in the past decade. The personal savings rate, as a share of disposable income, briefly fell below 3 percent in mid-2022. It now stands at 4.3 percent, meaning the average worker is saving less than 5 percent of disposable income.
The personal savings rate mostly ranged between 5 percent and 10 percent from 2010 until the onset of the COVID-19 pandemic, when it soared above 30 percent, boosted by federal relief funds and a stay-at-home lifestyle.
Savings dipped below 5 percent in 2022. Inflation surged, compelling the typical consumer to spend more and save less. The Federal Reserve responded with a campaign of interest-rate hikes, which raised borrowing costs and pushed many Americans deeper into the red.
The national credit-card balance now hovers around $1 trillion, and interest rates routinely exceed 20 percent.
Student loan debt is looming. More than 40 million consumers hold student loans, with a total of $1.6 trillion in debt, according to a TransUnion report. The average borrower carries about $35,000 in debt, and many loan customers have taken on new credit card debt since the pandemic’s start.
Student loan payments are set to resume in October after a three-year pause.
Not surprisingly, many Americans are feeling less confident in their financial prospects. A growing share of workers wonder if they will ever retire.
The Achieve survey found only 11 percent of Americans believe they are living by their definition of financial freedom.
And what does financial freedom mean? The top four responses: living debt-free, living “comfortably,” meeting one’s financial obligations with funds left over, and never having to worry about money.
Surprisingly, only 13 percent of respondents equated financial freedom with great wealth.
“With all of the economic pressures facing American families, financial freedom is currently more about making ends meet,” said Brad Stroh, co-founder of Achieve. “We’re seeing far fewer Americans with the goal of becoming rich and many families pivoting to just trying to be able to pay their bills on time.”