Some of these people are not like the others.
The median American household currently holds just $11,700 in savings, according to a new analysis of Federal Reserve and Federal Deposit Insurance Corp. data by personal-finance site Magnify Money. The top 1% of households by income have a median savings of $1.1 million in variety of saving accounts. The bottom 20% have no savings accounts and the second lowest 20% has just $26,450 saved. (The top 1% of households have an average of $2.5 million in these accounts, while the bottom 20% of households have an average of $8,870 saved.)
Median balances (the midpoint value) are lower than the averages. The median savings account balance is $4,830 versus $32,130 for the average savings account balance. Half of households have more than $4,830 in retirement, money market deposit, checking and savings and certificate of deposit accounts, while 50% have less than that. So while the average household has $277,670 in retirement accounts and $32,130 in savings accounts, for example, the median household only has $72,840 in a retirement accounts and $21,000 in savings accounts.
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What households save the most? “Wealthier households comprise most of them, but less-well heeled households can have healthy levels of savings as well,” the report concluded. Of those households that have managed to save more than the national savings average, 59% are among the top 20% of income earners. But many less well-off families have also manage to save money in these kinds of accounts: approximately 41% of above average savers are in the bottom 80% of income, the report said.
Very few of the 126 million U.S. households covered in the data are average, the report said. “As of 2016, about 78% of households had at least one of the following: a savings account, a retirement savings account, a money market deposit account or certificates of deposit.” The bad news: Just over half of Americans own stocks, a Gallup report recently concluded. That includes 401(k) plans, shares in an equity mutual fund and/or an IRA account. Two-thirds of Americans do not even participate in or have access to a 401(k) plan, according to the U.S. Census Bureau.
Also see: Americans are hoarding money in their checking accounts—and that could be a problem
There is also wide disparity in saving among the various generations, based on ages and income levels within each cohort. Millennial households have an average $24,190 in savings, for instance, but 50% has less than $2,430 saved, the report found. Generation X households have an average $125,560 saved, but again 50% has less than $15,780 in savings, checking, and retirement accounts. Baby boomers and older have an average $274,910 saved, but less than 50% of that cohort has less than $24,280 saved.
This is in contrast to the situation for the poorest Americans. Some 50.8 million households or 43% of households can’t afford a basic monthly budget for housing, food, transportation, child care, health care and a monthly smartphone bill, according to an analysis of U.S. government data released earlier this year by the United Way Alice Project, a nonprofit based in Cedar Knolls, N.J. “For too long, the magnitude of financial instability in this country has been understated,” said John Franklin, chief executive of the United Way Alice Project.
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The United Way Alice Project uses standardized measurements to calculate the “bare bones” household budget in each county in each state. It maintains that the federal poverty level — currently $25,100 for a family of four — doesn’t accurately illustrate the number of people living in poverty because it doesn’t take into account the dramatically different costs of living across the U.S. “It is morally unacceptable and economically unsustainable for our country to have so many hardworking families living paycheck to paycheck,” he said.
The project says Alice workers are the forgotten people: Child care workers, home health aides and retail workers in low-paying jobs and have difficulty saving money and are one paycheck away from the street. In 2017, 44% of people in the U.S. said they could not cover an unexpected $400 emergency expense or would rely on borrowing or selling something to do so, down from 46% the year before, according to a separate report released last year by the U.S. Federal Reserve, which surveyed a nationally representative sample of 6,600 adults.
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