Forget Retirement: Americans Aren't Even Set for Emergencies

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Many Americans aren't on track for retirement, with inadequate savings and poor planning. Effectively, the country is collectively driving into a brick wall starting in just a few years. But a new Bankrate.com survey says things are worse: consumers don't have enough money in the bank to weather an extended financial mishap.

In a telephone survey of 1,004 adults in the continental United States, only a third had the commonly recommended six months of living expenses in the bank. A sudden illness or job loss could make that amount of money the difference between coping and disaster. Forty percent had at least three months of expenses in savings -- down from 45 percent a year ago -- and 26 percent had no emergency savings at all.

"We've been asking this question for four years in a row," Bankrate.com chief financial analyst Greg McBride told DailyFinance. "What we've seen is a stunning lack of progress on the part of American households in accumulating emergency savings.

"There is a great deal of uncertainty and discomfort on the part of consumers with the savings they have accumulated," he said. However, "People are hemmed in by high expenses and stagnant incomes."

Save for an Emergency or Savor a $5 Latte?

In addition, many have destructive behaviors that undermine their chances of saving money. "Savings hasn't always been a very high priority among American consumers," said McBride. "It's ... ongoing stuff: the dinners out, the $5 cup of coffee on the way to work every morning, the latest and greatest iPhone."

%VIRTUAL-article-sponsoredlinks%"The most worrisome aspect of this is the age group most likely to have no emergency savings at all is between the ages of 30 and 49," McBride said. "Those are most likely families. They need that emergency savings, should a regular paycheck go away."

Although many assume that young people are less responsible with their money, the survey suggests that they are doing better. Those 18 to 30 were the most likely to have up to five months of expenses saved.

"They had a front row seat for this recessing and ensuing anemic recovery," he said. "But some of that is a reflection of the lower expenses they have. At least they've got some money put away."

McBride's advice is to prioritize spending. "If you wait until the end of the month to save what's left over, too often nothing's left over," he said. "Not only does it accomplish the savings, but it forces you to live on less than what you make."
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