Typical U.S. family is shy on savings

[Judi Lynn]

March 19, 2006, 7:21PM
Typical U.S. family is shy on savings
Survey by Fed shows low funds for emergencies and retirement

By NEIL IRWIN
Washington Post

WASHINGTON - Meet the typical American family.

With about $3,800 in the bank, no one has a retirement account. Mutual funds? Stocks? Bonds? Nope.

The house is worth $160,000, but the family owes $95,000 on it to the bank.

The breadwinners make more than $43,000 a year but can't manage to pay off a $2,200 credit card balance.

That is the portrait of the median American household as painted by the Federal Reserve Board's 2004 Survey of Consumer Finances.
(snip/...)

http://www.chron.com/disp/story.mpl/business/3732378.html

[sandnsea]

1. "That family would get an earful"

Just fuck these people. After seeing it in black and white, they STILL don't friggin' get it. It takes $43,000 a year just to make ends meet, there isn't anything left to save. Send them to my house, these sonsabitches won't have any ears left after I get threw with them.

[sugapablo]

2. It's about...

It's about priorities. I've made far less than $43,000/year and have always managed to put away plenty into savings, a retirement plan (one I maintain, not through work), and stay out of debt (no credit card debts. only debt is student loans).

People don't know how to be frugal, how to make do, how to save for something, not buy it first on credit and then pay it off.

If you have credit card debts you're struggling to pay off, do you really need digital cable with HBO, caller ID, a car that nice, etc.?

Of course not. Consumerism run wild.

P.S. Married, one kid.

[cmd]

3. Good for you

I noticed that you said "I've made". Do you make more than that now? Has any one in your family helped you out with a down payment for your house? Have you ever had unexpected expenses like a funeral that you have had to pay for when you had no money left for basic necessities? How's your health? Did you have an emergency appendectomy that cost you almost two thousand of dollars after your insurance paid its share: It's not about priorities. It's about things that happen to good people every day of their lives.

[sugapablo]

5. It IS about priorities.

"I've made" is still current. Never broke $32K in a year in my life. Always hopeful though! :)

Bought a crapped out house that wouldn't have even passed a section 8 inspection. Fixing it up. It didn't even have heat in every room when I got it. Coming along VERY nicely now. No mortgage.

Everyone in my family pre-pays their funeral expenses. No one would ever want to stick their children with expenses. (Priorities.)

Have good health care. Apendectomy had no co-pay. :) People have sacrificed much to keep crappy jobs with good insurance. (Priorities.)

Savings helps prepare for financial emergencies like those you mentioned. It can't cover everything, as catastrophic illness or circumstances can always happen, but you have to try and prepare for them.

I mean, if you live on the florida or gulf coast, or on a major fault line, or in an avalanche zone, or in a flood plain, you're taking big risks.

I live away from water, on high ground, away from hurricaines, tornadoes, earthquakes, etc., quite purposefully. No joke. It's about priorities.

Can't prepare for EVERYTHING, but with a miniscule amount of preperation, keeping your priorities in check, you can take care of most things.

[OhioChick]

7. And............What "if"

One is hanging on to that "crappy job" since it is all that is available out there........one that has poor health insurance.........and you have a chronically ill child.......whom might I add, needs daily medical attention?

[SammyWinstonJack]

12. It's the "pull yourself by the bootstraps" mentality.

:eyes: My son has a crappy job with no health benefits at all. He has to work at least 38 hrs/week just to get a one week paid vacation. No problem there except that they sometimes do not schedule him that many hrs. Just enough to keep him under the requirement. The result is that he hasn't had a vacation in over two years. Ah but that would probably be "uniquely 'Murican" according to our Vacation pResident.

[cmd]

11. Once again, good for you

However, not all people are in the same situation as you. Until you walk a mile in other peoples shoes, you cannot pass judgement on them. FYI, our house cost 28,900 when we bought it. I drive a '94 car with over 160,000 miles on it. I don't have caller ID or HBO. I don't live in Florida, the gulf coast, on a major fault line, flood plain, or in an avalanche zone. Tornadoes are rare where I live, but could wipe me out. I have savings. However, I do not have health insurance with no co-pay. I'm a retired public servant who has gone on strike to keep the insurance that I had when I was working. I also understand that bad things can happen to good people which can force them to borrow money or even go into bankruptcy.

[Cobalt Violet]

13. There aren't enough "crappy jobs with good insurance" to go around.

Some people work crappy jobs with no good insurance.

[shrike]

18. Oh, really?

What if you lost that crappy job with health insurance? (It happens. Often.)

What if that sub-Section 8 house was full of mold and you ended up losing this thing you're so proud of?

What if some fool plowed into you and you were laid up, possibly permanently? (Think you could live on disability? Think again.)

What if one of your kids came down with a serious, chronic illness: even with no co-pay, the incidentals add up. Don't worry; if it ever happens you'll find out.

You really think you're immune to any sort of natural disaster? Well, you'll find that out, too.

The thing is, I've got a lot more money than you do. I've got a lot more money than you probably will ever have. (And no debt whatsoever, btw; no cable, no call-waiting, no toys.) I've got a better house than you do, I've got a nice pot of money, and am at the point where I really don't have to worry about retirement or anything else. Yet I, unlike you, know enough about life to realize that so much of it is out of our control. That I owe much of my good fortune to luck. Yeah, sheer dumb luck -- I blundered into one or two good opportunities, was blessed to be born into an upper-middle class family. And I had people along the way who helped me. This "pull yourself up by your bootstraps" crap is just that -- crap. People need help. Yes, they need a work ethic and initiative, too, but so much, SO MUCH, can go wrong. And when things do go wrong, you need someone there willing to lend a helping hand, or even a kind word.

I remember a very low point in my life when I lost a job under very traumatic circumstances. I was in an area where I knew no one, and of course I had to go out and begin beating the bushes immediately, because I qualified for almost no unemployment.
The woman at the temp agency called me back the next day "just to see how I was doing."
"You'll land on your feet," she said. A prospective employer I sent a resume to called me at home. "Sounds like you've had some troubles," he said, sympathetically. He had no openings for me, but had some ideas for temporary work, and where I could get them. These people didn't know me from Adam, and they could have been assholes if they'd wanted to be, could have given me lectures about my perceived mistakes. Instead, they chose to be kind at a time when I needed kindness, and I'll never forget them for it.

Ergo, to make a long story short, I would never sit there and crow, about priorities or whatever, patting myself on the back and telling myself what a good/smart girl I am, because I know a lot of life's really bad shit just hasn't happened to hit me yet. I guess it all comes down to an old-fashioned work -- HUMILITY.

[Lars39]

21. Excellent post.

:thumbsup:

[Binka]

25. Reading My Mind Sister Friend

Something tells me that this "person" has a very different agenda than most here do. I must have read this same post on 100 different occasions. I think it's a script. They usually leave and guess what...they usually don't do it on their own. They get some help from DU. Whadda you know!

[prolesunited]

26. You summed it up nicely.

I was once on welfare for a short time. I am doing MUCH better now. I'll never forget that experience or the people who did not judge me and my mistakes, but rather gave me an opportunity to prove myself or perhaps a kind word.

You don't do it alone, and those that say they have are either lying or extremely bitter because they have no family or friends. But, with such a selfish, uncaring attitude, is it any wonder.

[brentspeak]

20. You are living on a major fault line, even if you don't know it

If you lose that crappy job that pays the incredible health benefits, it's highly unlikely, in today's American business world, that you'll find another crappy that can pay similar-quality health benefits. Many employees who have lucked into good benefit situations are usually long-term employees whose benefit packages were laid out way before the cost-cutting MBA's took over. And if they're recent hires who've gotten a good health package -- then they are definitely in the minority.

[raccoon]

22. I don't know where you live, but where I live, and in my job,

lots and lots of jobs offer no group medical insurance.

Where I work, 1/2 of the employees are part-time, no benefits, no insurance, etc.


"People have sacrificed much to keep crappy jobs with good insurance. (Priorities.)"

[Sapere aude]

29. Do you support a wife and children too?

[sandnsea]

31. Uhm, how do I say this

without getting banned, hmmm, your post smells of a cow pasture.

It lacks the basics of reality, which is the element of the unexpected. Life is not a textbook. I suspect you know that so I don't know why you find the need to post it. But you're certainly not the first.

[Retrograde]

34. there's a difference

There's a difference between people who have no reserves because they're living beyond their means, and people who have no reserves because of a run of bad luck.

I used to work with someone who would express envy that I owned a house in a fairly expensive community, moan that he would never be able to afford that, and then schedule a quick vacation in Italy. Wouldn't listen when I explained that when Mr. Retrograde and I decided to buy a house there we got along with one not very expensive car between us, no furniture to speak of, camping vacations, and putting my entire take-home pay and 20% of his into savings to scrape up the down payment, which pretty much put us in the position described in the original post.

BUT - we were also very lucky. No kids, young, a decent job market, some lucky investments.

"Have good health care. Apendectomy had no co-pay. :) People have sacrificed much to keep crappy jobs with good insurance. (Priorities.)"

My last company went from more business than we could handle to zero sales when our dotcom customers started defaulting on payments and going out of business. My whole department was laid off, initially with one week's severance which I managed to talk the president into extending for an additional week. Again, I was lucky to have a reserve, but not everyone did. If the same thing had happened to me 20 years earlier I would have ended up seriously in debt.

"I live away from water, on high ground, away from hurricaines, tornadoes, earthquakes, etc., quite purposefully. No joke. It's about priorities."

Are you sure? The only place in the US I can think of that doesn't have the potential for catastrophic earthquakes is central Texas. Tornados can and do show up in some unusual places - Sunnyvale, CA is hardly in tornado alley, but they had a freak one a few years ago. But there are other things to worry about, such as fires. Insurance can cover some eventualities, if you're lucky and the insurance company is quick about paying, but there are those immediate needs that can eat into your reserve.

Don't be too quick to cast blame: it's all too easy to wind up in a situation you didn't anticipate.

[FooFootheSnoo]

6. I totally emphathize with you cmd

My daughter was born 3 months early. I had to quit my job because putting her in daycare would have been disastrous for her health. Her co-pays between specialists and medicines were running me well over $100/month. Almost all of it went on credit cards. She qualified for $153/month ssi until her first birthday so that paid for formula and diapers. I wound up having to declare bankruptcy because the credit card companies were ready to sue. Her dad was not making good money at the time, so we were putting things like groceries and gas on his credit card. Yes, we did have dial up for our computer, probably didn't need that. That was our one luxury. Anyway, we don't have many nice things, we don't go out to dinner, movies, shopping, etc. and are still struggling. Things are slowly but surely getting better. There's really no way to anticipate what kind of medical problems may come along. Without insurace my daugher's hospital bill would have been $300,000. We don't have savings, we do have credit card debt.

[Le Taz Hot]

9. But don't you see?

It's ALL YOUR FAULT. You've been irresponsible and you haven't prioritized correctly. You should use the poster above as a role model because he/she seems to be perfect in every way and certainly has all the answers for everyone in every circumstance. :sarcasm:

Seriously, those of us who live down here in the real world can sympathize. My husband, with two college degrees, has been out of work for almost a year now and yes, we had savings. It's pretty much non-existent now.

[cmd]

14. I understand just what you are saying

That is why I posted what I did. I'm one of the fortuante ones. Yes, we did have to pay for a funeral for one of my extended family members. Yes, my daughter did have to have an emergency appendectomy that ended up costing a small fortune. However, all in all, I'm doing ok. I'm now retired and live comfortably, but not extravagantly. I feel so bad when I read stories like yours. You are the reason I wake up every morning determined to do something about the way this country is headed. Best of luck to you and your daughter. I wish I had the resources to take care of you. Hugs, cmd

[FooFootheSnoo]

33. Thanks cmd

Don't worry about us, we're fine. We do have a roof over our head, 3 squares a day, and love, love, love. I look at that and realize I'm richer than a lot of people around the world. I wouldn't trade excellent credit and a fat savings account for my beautiful little girl. I wish I was in a position to help others, but one day soon, we will be.

[Untermonkey]

16. Hear hear!

It is most definitely about having ones priorities in order. If $43,000 is not enough to make ends meet then the family in question is living above their means.

[raccoon]

23. Depends on a lot of things.

How many people in the family?

Where are they living? Big city or small town in relatively low cost area?

THE 64,000 QUESTION: Do they have medical insurance? If so, how good is it? Also, what's the state of the family members' health? Good health, or does one or more have a disability or chronic illness?

I might add, how lucky are this family?

[Binka]

27. As If. Try Living In The Bay Area CA On That.

Second post today that has RW financial points all over it. Hmmmmm. Gee wonder why that is? Welcome to DU it should be fun for you. BTW the sanctimonious self righteous attitude isn't helping. YMMV.

[sandnsea]

32. Oh my god

Let's knock off $10,000 for taxes. Then $12,000 for housing. Then knock off another $7,000 for health insurance and expenses. $4,000 for utilities. $6,000 for food. $3,000 for car expenses. That leaves a hot $1,000 a year for clothes, education materials, appliances, furnishings, etc.

Make ends meet, sure, as long as there are no emergencies. Save for retirement? Give me a friggin' break.

[cpamomfromtexas]

39. Wealth is HOW LONG CAN YOU LIVE WITHOUT A JOB?

Many people have to go job to job because the bigwigs know if they can keep everyone off-kilter and scared about the future, they've got a cheaper labor force.

All of my friends are living on much less than they used to, and it is a shock to everyone to have major adjustments in income because it makes it hard to plan.

[leftyladyfrommo]

4. You are certainly not alone.

When I was doing real estate mortgages I rarely saw anyone with any savings. But I did see lots and lots of people with a lot of charge cards that were maxed out.

[Mizmoon]

8. 10% in the 401k no matter what

that's how you have a decent retirement.

Regarding the "sick child scenario", back when I was flat broke I had a baby that was born three weeks premature. Then I had a complication that put me back in the hospital for two weeks. Medicaid paid every last penny. Maybe I was just the last of the "lucky" as far as government health assistance is concerned.

[queenjane]

10. Necessities vs. luxuries

I think most folks don't know the difference. I'm the only person I know without cable or high-speed internet. I don't have caller ID (that's what the answering machine is for--to screen calls). I drive a small domestic station wagon that's good on gas and has low insurance payments. My main indulgence is a twice-a-year trip to the Outer Banks, in the off-seasons when it's cheaper, in a room with microwave and fridge so I can prepare most of my food. I eat out maybe 3 times a year. I take advantage of all the free events/entertainment working for a university provides.

Many of my colleagues earn huge salaries, but have no savings, are putting nothing in their 403(b)s, and are maxed out on credit cards. These are not people working 43k jobs; they're making 6 figures. But they're going to Europe 3 and 4 times a year, or taking Alaskan cruises, buying $4 coffee several times a day, eating in expensive restaurants 5 and 6 nights a week, driving 50k SUVs, purchasing all the latest electronics, etc. We work in a field that's poised to be off-shored; in fact, our university is setting up a "collaborative" effort in a Southeast Asian country, an enterprise that will be up and running in a couple of years. Despite this, these folks are in total denial, keep demanding salary "adjustments", and spend, spend, spend. One of my colleagues just noted that she paid $150 for a pair of jeans, and what a bargain they were. I almost choked.

PLEASE NOTE: I am not talking about people in low-wage jobs, struggling to buy food and take care of their kids. I'm talking about well-paid, educated professionals who think they're set for life, and are immune to globalization, and can indulge themselves endlessly. (I don't make much--I'm administrative staff--but I always try to live BELOW my means.) We all know people who can't afford to save. What's worrisome is people who CAN afford to do so, and yet are drowning in debt.

[ckramer]

17. Your colleagues are financial idiots n/t

[Yavin4]

15. The Larger Issue Is Wages

Sure, you can be very diligent with your money. That's always the right answer, but we're really seeing the effects of having a non-union labor force. Unions would collectively negotiate salary increases for the workers, but those days are now gone.

In addition, the whole purpose of working is to have a good life. You shouldn't live in poverty even though you're working.

[raccoon]

24. You're right, and medical insurance makes a helluva difference too.

And dental insurance too, for those who are still so blessed as to have it.

[HughBeaumont]

19. "Get an earful"????

So, everyone's LUCK is now the same? Everyone's financial situations are now the same? La di da, savings should be NO PROBLEM!! You make 43k a year?? You mean that you aren't living like royalty off of that amount?? COME on! Pull yourselves up by your bootstraps, camper! You're not poor compared to the rest of the world!

"Time to pare back expenses"?? Between me needing a new bathroom because my current one is a moldy deathtrap, me needing basement waterproofing because my foundation is getting stairstep cracks, little triple-digit emergencies or unexpecteds that pop up almost monthly, the increased cost of gas, food, utilities, school, books, day care, auto repairs, etc, my miniscule tax return (because SOMEone's gotta fund the rich and pay for their oil wars, might as well be schmucks like ME!), getting no child support, having to have a car note on a used 2003 Corolla because the wife's '92 Nissan was practically on $200/mo life support and it just wasn't worth it, the fact that both of us have to work and are going no place really slow, our salaries that are losing big time to rising inflation, costs and taxes . . . I'd say I could save approximately BUPKIS PER MONTH!!!!

Why don't these people buy some compassion and a few clues? Sure they sell them at Nordstroms . . .

[holboz]

28. Doesn't surprise me...

I'm glad that we at least have some money going into retirement and for our children's college, but once we divide up all the money into their various pots we barely have enough to make ends meet, much less put back into a regular savings account:

We have...
-Health Insurance contribution
-Health savings account contribution (I'm not liking this HSA crap)
-IRA contributions (max)
-401k contributions (max)
- Kids' college savings

It's tough but we'd rather scrimp and save now so maybe we can have financial security when we're older and not be a financial burden to our kids. It's easy to hit rock bottom. When my daughter was born a couple of years ago she had pneumonia and hole in her lung. One week in ICU cost us $12,000 and that was WITH insurance. As a young married couple with a new baby, those hospital payments about damned near killed us. I know how easy financial security can be pissed away with an unforseen tragedy and it's frightening.

[Gormy Cuss]

30. The survey by the Feds is sobering and will be used to promote 'ownership'

by the neocons -- get the gov't out rather than make the government work for us on health care and retirement security. To quote financial advisers--er, excuse me, wealth management consultants-- is silly because they are always going to promote investment in stocks and bonds. That's how they make money.

I am also one of the fortunate ones who doesn't need to worry much about finances as an adult but I spent half my childhood worrying about whether there was enough money in loose change to buy luxury items like toilet paper. I know first hand what it's like to be without any spare pennies. When you're in that position there's not much you can do. That said, everyone else really needs to save every single cent that we can because we are on our own.

We also need to hire politicians who promote agendas focused on the interests of people rather than business.

[Strelnikov_]

35. Related Post On Kuntslers Blog

Jitters
March 20, 2006

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2006/03/jitters.html#comments

. . .

Last month a freak windstorm ripped through here and took down the electric power for three days. E lost communication with the payroll service (a separate company) that issues his employee's salaries. The storm happened in the middle of the day, Friday, payday.

The power came back on Sunday night, and on Monday two of E's employees each asked for private meetings with the boss. Because of the storm, they said, the payroll company had failed to make electronic salary deposits in their checking accounts. They were concerned because they were late on their mortgage payments and without the past week's electronic paycheck, they couldn't pay their mortgages.

E told me that these were "high-level employees" with substantial salaries who were both living in "very high-end homes," which around here would mean around a half-million dollars (and I know that in some parts of the US, like Washington, DC, or San Francisco, a half-million barely gets you a "pre-owned" raised ranch). He said he was shocked to discover that his executives were living from paycheck to paycheck, in houses that by normal criteria (i.e. pre-bubble standards) they probably couldn't afford

. . .

[shadowknows69]

36. Shy on savings

is that the latest newsspeak for POOR AND LIVING ON THE POVERTY THRESHOLD?

[Danieljay]

37. duplicate n/t

[Danieljay]

38. Typical. Families have had to dip into their savings and its now

becoming more apparant. When I was laid off for 2 years, I had to spend my savings, my 10 grand in retirement and now just got hit up with a $2800 tax bill for early withdrawal. I received less than 6 months of unemployment and was refused an extention. I lost my health insurance and had to pay out of pocket for continuing coverage which I had to let lapse after 4 months. I went with out insurance for another year and a half. I worked for 13 years in the aerospace industry and I was refused further assistance. I had to use my money to survive and pay my bills.

I'm still recovering from that layoff and dont have much savings or retirement to speak of. Scary place to be, i'll tell ya. I'm working now getting half the wage but I'm happy to have a job and good insurance. I hated that industry anyway. I no longer own a home, I equally share expenses with my gf, and wonder when I'll be able to buy another house.

I'm telling you, my situation is way too common

[alarimer]

40. I have $600 in a savings account, no 401k, no house

I have never made more than I make now, about 31k. I have never been able to afford to buy property ( I could never afford it here the way property taxes keep going up). I had a shitload of student loans that I am just now paying off (after 15 years). So bully for anyone who is doing better. I have had a series of low-paying jobs, despite having a college degree (it is in marine biology, with only a BS you get the crap jobs). I am 37 years old. I have no idea how I am aever going to afford to retire. Hopefully getting my Masters will lead to better jobs. But who knows??

I do have good health insurance (at least for now). But it is scary. I have nothing to fall back on. Some of that is my fault (I guess I choose to do something I wanted to do, rather than something that would make me a ton of money- guess I should have been a CPA or something LOL). But some of it isn't. And even a major car expense would be a setback.