Advertiser Disclosure

News

Survey: 53% of Americans Live Paycheck to Paycheck

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Many Americans are living life on the edge — financially, at least. A new survey from MagnifyMoney revealed that a staggering number of people live paycheck to paycheck — and that just one missed paycheck would cause bills to pile up. According to our survey of over 1,000 Americans, 62% don’t have the recommended three months of living expenses saved up.

Key findings

  • 53% of respondents live paycheck-to-paycheck, meaning they have no money left after all expenses are paid. An even higher number (62%) said they don’t have three months of living expenses saved up.
  • 70% of respondents said that even one missed paycheck would cause bills to pile up. Nearly 44% of respondents wouldn’t be able to pay for their housing if they did not receive their next paycheck, and about 1 in 4 would have to miss a credit card payment.
  • More than 1 in 10 respondents don’t have enough money to cover even one week without getting paid.
  • On average, respondents could go 10 weeks without getting paid. Those earning six figures, though, could last more than twice as long, averaging about 23 weeks.
  • Millennials wouldn’t fare well with a missed paycheck: Less than a third of millennials have three months’ expenses saved, and nearly half said they wouldn’t be able to pay rent without their next paycheck.
  • Even high earners would suffer without their next paycheck: 52% of those earning more than $100,000 would have to skip at least one bill, and 28% report living paycheck-to-paycheck.
  • Men could go one month longer without a paycheck than women. On average, male survey respondents indicated they could make it almost 12 weeks without pay, while the average woman could only last 8. Additionally, men are more likely than women to have an emergency fund with at least 3 months’ expenses saved.

Who lives paycheck-to-paycheck

Overall, our survey found that a whopping 53% of respondents are living paycheck-to-paycheck, meaning they don’t have money left over after all their expenses are paid for. Interestingly, there were people in every generation and across every income level that said they live paycheck-to-paycheck, proving that even older and wealthier respondents skate on thin ice, financially.

In fact, there weren’t any significant differences in how many people live paycheck-to paycheck per generation: 58% of millennial respondents live paycheck-to-paycheck, as do 59% of Gen Xers and 47% of baby boomers. Nearly 55% of female respondents saying they live paycheck-to-paycheck and 51% of male respondents.

Understandably, though, the number of people living paycheck-to-paycheck varied among different income levels, with poorer households more likely to cut it close financially. Still, a surprisingly significant number of wealthy households have little financial wiggle room, too. Our survey found 28% of people who make at least six-figures have no money left over after paying for their expenses. That’s compared to 41% of households who make between $75,000 to $100,000; 47% who make between $50,000 to $75,000; 55% who make between $35,000 to $50,000; 66% who make between $25,000 and $35,000; and 67% of households who make less than $25,000.

How many weeks people can live without a paycheck

Experts often recommend that you have enough in your savings to survive for three to six months without income, which equates to 12 to 24 weeks of living expenses. However, our survey found that most respondents only have enough saved to survive much, much less than that.

Our survey found that on average, respondents could live for 10 weeks (a little over two months) without getting paid again after receiving their last paycheck. That number varied vastly among male and female respondents, though, with the men surveyed saying on average they could get by for 11 weeks without getting paid again, compared to women’s average of just 8 weeks. One potential reason for this discrepancy could be the gender wage gap, in which women make only 82 cents for every dollar made by a man — less money earned means less money to save.

By generation, there was a big difference in the number of weeks people said they’d be able to go without receiving a paycheck. On average, millennials said they could survive only 7 weeks without a paycheck and Gen Xers only 8 weeks. That’s much less than baby boomers, who said they could live for 14 weeks without pay.

Not surprisingly, there were also big differences among income levels when looking at how long a person could go without pay. Households making over $100,000 said they could survive 23 weeks, those making between $75,000 and $100,000 said 11 weeks and households earning between $50,000 and $75,000 also said 11 weeks. Meanwhile, households making between $35,000 and $50,000 said only 6 weeks, $25,000 to $35,000 households said just 4 weeks and those making less than $25,000 said 6 weeks.

Most people don’t have enough to cover three months of expenses

Another jarring discovery from our survey was that most people don’t have enough money in savings to cover three months of living expenses — which is often the bare minimum recommended as an emergency fund.

Overall, a whopping 62% of people said they do not have at least three months of living expenses saved up. The demographics that were most likely to say that they do not have at least three months stashed away include female respondents (67%), millennials (69%) and households making less than $25,000 (79%).

Additionally, overall, our survey found that 70% of people would not be able to pay all of their bills if they missed a paycheck. Even more bleak is that nearly half (48%) of millennials wouldn’t be able to pay rent or their mortgage if they missed a paycheck.

How much money should you have in your emergency fund?

While our survey found that most respondents are struggling with saving, most financial experts recommend saving between three to six months of living expenses in a liquid emergency fund, such as a high-yield savings account. This should be enough to allow you to pay your bills and live comfortably if you lose your job or get hit with a big, unexpected expense, like a medical bill.

However, three to six months is just a guideline, and shouldn’t be viewed as one-size-fits-all. If you’re single with a steady job, three months of savings should be sufficient, while people with a spouse and children to support should aim for six months. Those that are self-employed, though, should play it safe and shoot to save at least nine months of living expenses in their emergency fund.

Methodology

For our survey, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,007 Americans, with the sample base proportioned to represent the overall population. The survey was fielded October 25-29, 2019.

For our survey, we defined generations as: millennials are ages 23-38, Gen Xers are ages 39-53, and baby boomers are ages 54-73. Members of Generation Z (ages 18-22) and the Silent Generation (ages 74 and older) were also surveyed, and their responses are included within the total percentages among all respondents. However, their responses are excluded from the charts and age breakdowns due to the smaller population size among our survey sample.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Advertiser Disclosure

News

Survey: Millennials Are Underestimating Retirement Savings Needs

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

For many savers, a cozy retirement can seem like a distant dream rather than a realistic future. Costs of living continue to rise, while it’s becoming harder for many to keep up with saving. More and more senior citizens are working into retirement, and millennials may be underestimating just how much they’d need to save for retirement in the first place.

MagnifyMoney commissioned a survey of 800 full-time workers to get a better look at their understanding of their own retirement savings needs. The results show that while millennials may be underestimating the real costs of retirement, so are baby boomers. Furthermore, some baby boomers indicated that no amount of money would make them comfortable enough to retire.

Key findings

  • 73% of full-time working Americans believe $1 million is enough to get them through retirement if they stop working at age 66. There was widespread agreement on this across all age groups.
    • $1 million in retirement savings is a general rule of thumb to follow, although an individual’s actual retirement savings should be more specific based on projected spending in retirement.

  • Meanwhile, nearly 1 in 5 millennials said having $500,000 in their retirement savings account would make them comfortable enough to stop working tomorrow. Another 14% of millennials would retire after amassing $750,000.
    • Millennials aren’t alone in believing less than $1 million is enough. Across all age groups, 20% of respondents said that $500,000 in retirement savings was enough. The next largest cohort — 17.4% of respondents — said $1 million in retirement savings was enough.
  • Interestingly, more than 1 in 5 baby boomers responded similarly to millennials, saying just $500,000 would get them through retirement if they stopped working tomorrow. Another 15% of boomers said $750,000 would be enough to retire.
  • Some baby boomer respondents offered a bleaker outlook: More than a quarter of Americans ages 54-73 reported that no amount of money would make them comfortable enough to retire.
    • Boomers were almost twice as likely to say that no amount of money would make them comfortable enough to stop working compared to younger Americans. 14.4% of millennials and 15.2% of Gen X-ers had the same sentiment.
    • Boomers may be less willing to stop working than other age cohorts because they believe they need to save more before they stop working, or because some feel you can never really have enough money saved for retirement.
  • More than 1 in 10 Americans have lofty goals for their retirement savings. Just under 12% of our respondents want to accumulate at least $3 million before ending their career.

How much should I save for retirement?

Saving for retirement is not an exact science. Shooting for a $1 million nest egg is a common rule of thumb — and most survey respondents agree that $1 million would be enough.

However, the amount of retirement savings you need depends on your estimated expenses in retirement. Your exact number could be more or less than $1 million, depending on how much you expect to spend on housing, discretionary costs or lingering debts.

For example, $1 million in savings would fund a 20-year retirement where you’re limited to $50,000 in annual spending. If you anticipate a 30-year retirement, $1 million in savings would only cover around $33,000 in annual spending.

How much you should have saved for retirement also depends largely on your age. For example, it’s unlikely that at 30 years old, you’ll already have $1 million set aside unless you’re extremely blessed. You’ll have to build up your savings as you go and as your income, hopefully, increases with age.

Fidelity offers a different take on savings guidelines by age. According to Fidelity, by age 30 you should have 1x your annual salary saved, growing to 3x your annual salary saved by age 40, 6x by 50, and 8x by 60.

How do I save for retirement?

If you think you’ve underestimated how much you truly need to save for retirement, there’s still time to get your savings on track.

A common retirement savings tool is the 25x rule, which dictates you need to have 25 times your annual retirement expenses saved. Core to this rule is the assumption that you’ll need to cover 25 years of retirement. So if you calculate an estimated $70,000 in annual spending in retirement, for example, following the 25x rule would indicate a nest egg goal of $1.75 million.

That’s a far cry from the mere $500,000 that 20% of our respondents indicated would be adequate for retirement. If you stuck to that goal, by the 25x rule, your annual spending in retirement would be cut down to $20,000.

It’s best to throw your retirement savings into an investment account, rather than a high-yield savings account. Over time, investing can post returns around 8%, well above the 2% savings APYs we see today. Retirement savings are more than just your 401(k), too: individual retirement accounts, or IRAs, allow you to save on your own, whether instead of or in addition to your 401(k).

If you’re an investing beginner, there are a ton of resources out there to help you get started. Robo-advisors and online brokerages offer an easily navigable investing experience that allow you to set your own goals and preferences.

Methodology

MagnifyMoney by LendingTree commissioned Qualtrics to conduct an online survey of 816 full-time American workers. The survey was fielded October 1-3, 2019.

We define millennials as those aged 23 to 38, Gen X as those 39 to 53 and Boomers as those aged 54 to 73. Members of Gen Z (ages 18 to 22) and the Silent Generation (ages 74 and up) were also surveyed, and their responses are included within the overall total percentages. However, they were excluded from the age breakdowns due to the lower sample size among respondents in those age groups.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Advertiser Disclosure

News

Survey: For 36% of Americans, Economy Informs 2020 Presidential Preference

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The presidential election will dominate headlines throughout 2020, with voters and pundits alike obsessively following polls, reading coverage and watching debates to get a feel for who’s leading in the race for the White House. In addition, they’ll be closely watching another key indicator for the race: the performance of the U.S. economy.

MagnifyMoney commissioned a survey of 1,000 Americans to gauge how people think about the relationship between the economy and the 2020 presidential election. Our survey found that nearly four in ten respondents said monitoring the economy helps them decide which candidate to support, and believe the results of an election can be at least somewhat predicted by the performance of the economy.

Key findings

  • About 41% of respondents believe the outcome of a presidential election can be predicted based on U.S. economic performance in the 12 months leading up to the election.
    • Around 36% said monitoring the stock market and the economy helps them decide which presidential candidate to support.
  • Republicans are more confident than Democrats about three key aspects of the economy over the next 12 months: that the stock market will continue to rise, jobs will continue to be added to the economy and the overall economy will continue to grow.
  • Nearly 1 in 3 respondents think the 2020 presidential campaign will positively impact the economy — while about 18% believe the economy will be negatively impacted.
    • Investors are almost twice as likely as non-investors to believe the campaign will positively benefit the economy, and six-figure earners are also more likely to agree with this proposition.
  • Like many topics in politics, the potential economic impact of re-electing Donald Trump is a polarizing subject.
    • When asked which 2020 presidential candidate made them most optimistic about the future of the U.S. economy, the most-cited candidate was Donald Trump, with 33% of respondents overall.
    • When asked which candidate made them most pessimistic about the future of the U.S. economy, Trump was yet again the most cited candidate, by 35% respondents overall.

How could the state of the U.S. economy impact the election?

Our survey found that about 4 in 10 respondents think you can at least somewhat predict the outcome of the presidential election based on U.S. economic performance in the year leading up to the election. Meanwhile, 37% say that they do not think that economic performance could predict the election’s outcome, while nearly 22% were not sure.

Republicans were more likely than Democrats to say that economic performance could at least somewhat predict the 2020 election, 53% versus 43%. Meanwhile, 50% of millennials think that the state of the economy could at least somewhat predict the 2020 election, compared to 40% of Gen Xers and 32% of baby boomers.

Our survey asked whether people monitor the stock market and economic performance when deciding which presidential candidate to support. We found that the majority of people (64%) do not track such metrics when deciding who to support, while approximately 21% do somewhat and 15% do a great deal. The results didn’t differ greatly when considering party affiliation: 40% of Democrats and 42% of Republicans follow these metrics at least somewhat when determining who to vote for.

How could the election impact the U.S. economy?

While our survey revealed that many people think that economic conditions can help predict the outcome of the 2020 election, we also asked respondents how they think the election will impact the economy once the polls close and the next president is selected.

Overall, people feel very differently about how the 2020 election results will impact the economy, with 31% of respondents saying it will positively affect it, 18% saying it will negatively affect it, 42% saying they are unsure how it will affect it and 9% saying it will not affect it at all.

Those results look somewhat different when party affiliation is taken into account: 41% of Republicans said the outcome of the election will positively impact the economy, compared to just 32% of Democrats. Meanwhile, Democrats were more likely to say that the election would have a negative impact on the economy, 19% compared to 14% of Republicans.

Different generations also had different thoughts on how the election’s results might affect the economy, with millennials (39%) most likely to say they think it will have a positive impact, followed by Gen Xers (28%) and baby boomers (24%). In contrast, Gen Xers were the generation most likely to say the election will have a negative economic impact (20%), followed by millennials (18%) and baby boomers (15%).

Our survey also revealed how people think the stock market will react to a President Trump re-election. Overall, 31% of respondents think that the stock market will fall if Trump is re-elected, 26% think the market would rise, 28% are unsure of how the market would react and 16% think it won’t change. Not surprisingly, 50% of Democrats think the stock market will fall with a Trump re-election, while 52% of Republicans think it will rise.

How could the election impact investor confidence?

Everything from a CEO’s tweets to global trade deals has the potential to rattle an investor’s confidence — and our survey found that the 2020 election is no exception.

Interestingly, we found that overall, 37% of people avoid investing their money during election years. That includes 41% of Democrats and 39% of Republicans, as well as a whopping 56% of millennials, 29% of Gen Xers and 13% of baby boomers.

One reason for the lack of investment during election years could be chalked up to overall uneasiness about the state of the economy in general. When looking at the 2020 election in particular, many respondents aren’t too confident in many metrics that measure the health of the economy.

Overall, 28% of those surveyed are at least somewhat unconfident that the stock market will continue to rise, 30% are at least somewhat unconfident that the U.S. will continue adding jobs in the next 12 months and 29% are at least somewhat unconfident that the overall U.S. economy will continue to grow over the next 12 months.

When looking at confidence levels regarding the overall future of the economy, our survey found that Democrats are much more pessimistic than their Republican counterparts: 38% of Democrats were at least somewhat unconfident that the overall U.S. economy will continue to grow over the next 12 months, compared to just 19% of Republicans who feel the same way.

When looking at how the economy is now versus how it was on the night of the election in 2016, different political parties have very different viewpoints. Only 16% of Democrats think that the economy is in a better position now, compared to a whopping 68% of Republicans.

When asked which presidential candidate made them the most optimistic about the future U.S. economy and which one made them the most pessimistic, the most popular candidate was the same for both: Donald Trump. Overall, 33% of respondents said that Trump was the candidate that made them the most optimistic about the economic future, followed by Joe Biden (17%), Bernie Sanders (14%) and Elizabeth Warren (12%).

Meanwhile, 35% of respondents said that Trump was the candidate that made them the most pessimistic about the future of the U.S. economy, followed by Sanders and Biden (both at 14%) and then Warren (11%).

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,048 Americans, with the sample base proportioned to represent the general population. The survey was fielded October 1-3, 2019.

In the survey, generations are defined as:

  • Millennials are ages 23 to 38
  • Generation Xers are ages 39 to 54
  • Baby boomers are ages 55 to 73

Members of Generation Z (ages 18 to 22) and the Silent Generation (ages 74 and older) were also surveyed, and their responses are included within the total percentages among all respondents. However, their responses are excluded from the charts and age breakdowns due to the smaller population size among our survey sample.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.