Why Are So Many Households Unable to Cover a $400 Unexpected Expense?
The brief’s key findings are:
- About 40 percent of households, spanning the income spectrum, say that they couldn’t cover a $400 unexpected expense.
- In fact, some of these households actually do have enough to cover this modest expense, but they feel constrained by credit card debt.
- Overall, the analysis finds that the vulnerable households fall into two main groups:
- those with low incomes, low educational levels, and/or a job loss; and
- those with moderate to high incomes but with substantial debt, such as credit card balances, mortgages, and/or student loans.
- This widespread lack of precautionary savings is likely one reason why many households have trouble saving for retirement.