Americans are not prepared for financial emergencies

BPC’s new Commission on Retirement Security and Personal Savings will examine the state of personal savings and retirement security in the U.S. and make recommendations on how to improve the economic circumstances of retirees. Over the next few weeks we will look at the many important measures that illustrate different aspects of savings and retirement security.

Roughly 44 percent of Americans say they are not prepared to meet emergency expenses. When asked if they could come up with $2,000 in 30 days, one-quarter of the people surveyed said that they were certain that they could not. An additional 19 percent responded that they would be forced to sell possessions, such as cars, furniture, or their homes, to do so.

Americans who are insecure about their ability to come up with even a relatively small amount of money for an emergency, such as paying for a car repair or meeting a health insurance deductible for a major operation, are doubtless struggling to save for major purchases. Those individuals are also more likely to rely on expensive forms of credit, such as payday loans. Efforts to combat the long-term decline in the saving rate and improve Americans’ retirement security should also address their ability to save for emergencies.

Alex Gold and Nick Peacher contributed to this post.