You’ve likely heard of the phrase “saving for a rainy day” yet, according to Bankrate.com, only 39% of Americans would be prepared when that rainy day comes.
That’s right. When it comes to being able to cover an unexpected $1000 expense like a medical bill or emergency repair, only 39% of Americans said they could cover it and another 38% would need to borrow money either by putting it on their credit card or asking family.
Greg McBride, Bankrate.com’s chief financial analyst, claimed the “precarious state of Americans’ emergency savings was further set back by the pandemic” – the most likely culprit in the drop from 41% of Americans claiming they would be able to support an $1000 expense in 2020 to 39% this year.
Pandemic Impact On Savings
Many have faced a number of unplanned expenses and financial setbacks due to job displacement and a struggling market, forcing their savings to take a hit. Some on the other hand, have been able to cut back on costs like travel and entertainment spending, and seen savings growth. Those feeling the pandemic’s impact the most are lower income households. CNN reported “only 21% of those earning less than $30,000 a year can cover emergency costs with savings.” Even among those earning $75,000 or more per year, only 58% have the money available.
While some, especially older Americans, are feeling less than optimistic about improvement in 2021, a broad sense of hope remains. The same Bankrate.com report found 44% of people reported an expectation of financial improvement this year. Whereas only 14% expected their finances to get worse.
The vaccine, explained McBride, is a major contributor to that hope. “Widespread vaccine availability brings the hope of normalcy we’ve all been craving, and optimism that this year will be better for our finances,” he said. “For many, 2021 will be a year of trying to right the financial ship.”
Benefit Advisors Can Help
Another contributing factor are companies like Simpara, who are committed to making healthcare coverage more affordable for employers and employees alike. In fact, just recently we worked with Shine Solar to lower their costs and put rainy day savings within reach for their employees.
“I just want to say thank you for your hard work on getting Shine Solar’s awesome new insurance,” one enthusiastic Shine employee said. “I had a wellness check, bloodwork and an ultrasound done. I have paid nothing out of pocket for these services.” The same employee claims their savings for the year will amount to $1092 – “a beach in Florida for a week” or enough to cover that unexpected rainy-day expense.
While many have been and will continue to struggle financially due to the impact of the pandemic, we’re committed to easing that burden. If more employers like Shine Solar questioned their costs and reevaluated their healthcare coverage, you’d be surprised how many more Americans could afford that unplanned $1000 expense.
