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Board of Governors of the Federal Reserve System
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Report on the Economic Well-Being of U.S. Households in 2013

Savings Behavior

The survey asked a number of questions about respondents' general savings behavior, spending priorities, and ability to withstand significant financial disruptions. In general, the results demonstrate that many households are saving and want to save or pay down debt, although others struggle to maintain a financial safety net.

Saving and Spending

When asked what portion of their 2012 income was set aside as savings, a majority (55 percent) of survey respondents reported saving at least some part of their income. The average percentage of income reported saved among all respondents was 9 percent; however, the median was much lower (2 percent), and 45 percent of respondents reported that they did not save any portion of their income in 2012.4 Of those respondents who did save, the average amount saved was 16 percent, with the median being 10 percent.

The amount that individuals reported saving is correlated with age: younger individuals reported saving a larger fraction of their incomes than older individuals, at statistically significant levels. Respondents ages 18 to 29 reported saving an average of 11 percent of their income; each of the other age groups (30-44, 45-59, and 60 or over) reported saving an average of 8 percent.

Relationships with financial institutions are highly correlated with saving, though causation is not clear: it could be that those who want to save are more likely to open accounts to do so, or that those who already have accounts simply find it easier to then save as a result. Respondents with a checking, savings, or money market account reported much higher levels of saving in 2012 than those without an account. Of the 90 percent of respondents with these accounts, the average percentage of income saved was 9 percent.5 Of the remaining 10 percent of respondents who did not have a checking, savings, or money market account (the "unbanked"), only one in five (18 percent) reported saving any part of their income. For the unbanked, the average amount reported saved was 3 percent.

Respondents who reported saving some part of their income were asked to select all of the applicable reasons for why they were saving (table 6). The top reasons for saving were for their retirement (58 percent), unexpected expenses (53 percent), and "just to save" (49 percent).

Table 6. Which of the following categories, if any, are you saving money for?
Percent, except as noted
Category Yes No
Retirement 58.0 42.0
Unexpected expenses 52.6 47.4
Just to save 49.1 50.9
Pay off debts 26.5 73.5
Your children 20.5 79.5
Major appliance 20.4 79.6
Education 17.9 82.2
Home purchase 13.0 87.0
Leave inheritance or charitable donation 10.6 89.4
Total number of respondents 2,270

Note: Among those who report saving some part of their income.

According to the survey, respondents said that they were currently emphasizing paying down debt and saving. Just over half of respondents regularly set aside part of any income they received in a separate savings account. As another gauge of respondents' spending and saving priorities, the survey included a hypothetical question asking people how they would allocate the money if they unexpectedly received an extra $1,000 in income. Just under half reported that they would spend at least some of this windfall. Overall, the average hypothetical spending was $227, the average hypothetical saving was $395, and the average hypothetical amount allocated to paying down debt (a form of saving) was $377. Only about 7 percent said that they would spend the entire $1,000. Just over 20 percent reported that they would use the entire $1,000 to pay down debt, while another 17 percent reported that they would save the entire $1,000.

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Emergency Savings

In addition to the general questions about saving, the survey asked respondents several questions to better understand their ability to withstand emergencies, such as the loss of a job, extended illness, or major unexpected expense. The responses varied depending on which specific question was asked, but in general the results indicate that many households appear ill-prepared for emergencies.

Half of respondents were asked if they had set aside an emergency or rainy day fund that would cover three months of expenses. The other half were asked a broader question, "If you were to lose your main source of income (e.g., job, government benefits), could you cover your expenses for 3 months by borrowing money, using savings, selling assets, or borrowing from friends/family?" Among those asked if they had a rainy day fund, 39 percent said yes, while 56 percent of those asked the broader question said yes. This difference may suggest that some respondents expect to rely on debt or their personal social networks as a safety net in an emergency in the absence of sufficient personal savings.

Despite having less time to have built up savings, young respondents reported similar frequencies as older working-age respondents of having rainy day funds. Among respondents under the age of 60, the presence of rainy day funds does not vary significantly by age, although individuals ages 60 or older are more likely than others to have them (table 7).

Table 7. Have you set aside emergency or rainy day funds that would cover your expenses for 3 months? (by age)
Percent, except as noted
Age categories Yes No
18-29 33.2 63.0
30-44 32.6 63.6
45-59 34.4 64.1
60+ 56.3 41.7
Overall 39.4 57.9
Total number of respondents 1,998

The results by age were similar when respondents were asked the broader question including borrowing and selling, although the numbers were higher across the board. For respondents under the age of 60, about one-third had rainy day funds, but about half said they could "cover expenses," including by borrowing. For those over the age of 60, a bit more than half (56 percent) had rainy day funds, but two-thirds responded affirmatively to the broader question about covering expenses (table 8).

Table 8. Could you cover your expenses for 3 months by borrowing money, using savings, selling assets, or borrowing from friends/family? (by age)
Percent, except as noted
Age categories Yes No
18-29 53.9 42.5
30-44 48.0 49.9
45-59 53.4 45.0
60+ 66.6 31.8
Overall 55.6 42.2
Total number of respondents 2,136

The prior questions asked respondents about a serious and prolonged (three-month) disruption in their financial lives. To get a more nuanced understanding of how financially fragile various households may be, the survey also asked a similar question--but about a disruption on a much smaller scale. Respondents were asked how they would pay for an emergency expense that came along and cost $400. Just under half (48 percent) reported that they could fairly easily handle such an expense, paying for it entirely using cash, money currently in their checking/savings account, or on a credit card that they would pay in full at their next statement. The remainder indicated that such an expense would be more challenging to handle: respondents indicated that they simply could not cover the expense (19 percent); would have to sell something (9 percent); or would have to rely on one or more means of borrowing to pay for at least part of the expense, including paying with a credit card that they pay off over time (17 percent), borrowing from friends or family (12 percent), or using a payday loan (4 percent).

The Great Recession appears to have had a significant effect on respondents' tapping into their savings, including those specifically set aside for a rainy day. Sixty-one percent of respondents said that their household had savings prior to 2008. Of that group, 32 percent said that they had used up some of their savings in the intervening five years, 12 percent had used up nearly all of their savings, and 13 percent had used up all of their savings. Overall, the survey results indicate that a great number of households want to save, many are doing so, but that others indicate some measure of significant financial vulnerability to unexpected events. This has potentially increased in recent years as a result of eroded savings.

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4. Respondents were not able to report negative levels of savings if they are borrowing to spend more than their income or spending out of their savings. As a result, the average level of savings for the population may be less than the 8 percent reported once these dissavers are included. Return to text

5. The 90 percent of respondents with a checking, savings, or money market account is consistent with the Federal Deposit Insurance Corporation's estimate that 92 percent of individuals have a bank account of some kind. See to text

Last update: August 15, 2014

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