The financial well-being of most households in the U.S. continued on a modest upward path, according to an annual report from the Federal Reserve.
Based on findings from the Federal Reserve’s fourth annual Survey of Household Economics and Decision Making, 29% are “living comfortably” while 40% are “doing okay”, both up from a year ago, but at a gradual pace that underscores the anemic economic recovery. Thirty-percent find it difficult to just get by, or are just getting by, down a percentage point from 2015.
Optimism toward their financial situation was more prevalent among respondents with at least some college education than those with only a high school degree or less. Forty-percent of respondents with a high school diploma or less are still struggling financially. And 24% have a work schedule that varies based on their employers’ needs, adding further financial challenges.
Financial instability among U.S. households resulted in 23% of all households unable to pay all their current month’s bills in full, 25% unable to pay medical treatments, and 44% were unable to pay an unexpected $400 expense, down 6 percentage points from 2013. Of those unable to pay a $400 expense, 45% would use a credit card, 25% would borrow from family or friends, and 27% would sell something or use a payday loan.
Retirement is another challenge to most households. Twenty-eight percent of non-retired respondents lack retirement savings, and of those with retirement savings, 53% were “not comfortable” or “slightly comfortable” in their ability to make the right investment decisions for their retirement accounts.
As for the housing market, of the 28% of Americans who rent, 80% say it is the inability to afford a downpayment, and/or qualify for a mortgage as the leading reason they rent rather than buy a home. Of those that do own a home, 72% do so for the investment, and 46% believe its cheaper to own than rent.