Working Americans are generally recommended to save anywhere between 10 and 15 percent of their annual income. However, a survey by personal finance news site GoBankingRates found Americans are doing the exact opposite and spending more of their earnings rather than saving for a rainy day, USA Today reported Sunday.
Researchers conducting the survey – which asked more than 7,000 people how much money they have saved up – discovered that almost seven in 10 people, or 69 percent, had less than $1,000 in their savings accounts. Comparatively, GoBankingRates previously conducted the same survey of 5,000 people and 62 percent of them had less than $1,000 in their savings account in 2015.
Further results from the survey showed that 34 percent of Americans didn’t actually have any money in their savings account. Thirty-five percent have less than $1,000; 11 percent have between $1,000 and $4,999; 4 percent have between $5,000 and $9,999; and 15 percent have more than $10,000.
Adults with lower income struggled to save money more than upper and middle income earners, but adults in the "no income" group had better savings than surveyors expected. Twenty-nine percent of people who earned more than $150,000 had less than $1,000 in their savings while 44 percent of adults making between $100,000 and $149,000 weren’t able to keep $1,000 in their savings account. Of the people who made up the lowest income tier – earning $24,999 or less annually – 73 percent had less than $1,000 in their savings account.
One of the reasons Americans aren’t saving so much could be because they are spending so much more, researchers said. That is especially true when it comes to credit cards and cashless payment options like Apple Pay making it easier for American’s to indulge in impulse spending.
Age was also a factor in the results, which showed older Americans account for the groups that still had at least $1,000 in their savings account. The data also showed the Americans with thousands of dollars in their savings are also older. Thirty-seven percent of seniors 65 and older have stored up more than $1,000 in their savings while only 27 percent of millennials have more than $1,000.
The data seems to be in line with a recent study on millennials that found more young adults were struggling to cover their expenses with their current salaries due to the aftereffects of the Great Recession. The study found only 35 percent of millennials made enough money to cover their expenses, and 30 percent of them were not able to cover their expenses based on their current earnings. Only 6 percent of those surveyed said they made more than needed to cover their expenses. Overall, 63 percent of American millennials said they’d struggle to pay off an unexpected $500 expense.