Study: Nearly Half Of Americans Have No Financial Safety Net
WASHINGTON (CBS DC) — Nearly 44 percent of Americans don’t have enough savings or assets to stay out of poverty should they lose their income.
A new report from the nonprofit Corporation for Enterprise Development (CFED) also finds that almost one-third of Americans do not have a savings account. The state-by-state breakdown of “assets and opportunity” shows that savings have been hit hard across the country, but some regions are much worse than others.
Almost every Southern state – ranging from North Carolina down to Florida, and west to Arkansas – was ranked in the worst category of “liquid asset poor.”
The nonprofit company attempts to assist low-and-moderate income families in building and preserving their assets. The report stresses that asset ownership and financial security are interconnected. Owning assets means having greater economic stability and mobility; assets enable millions of Americans to plan for the future, buy a home, prepare for retirement, send their children to college and weather unexpected financial storms.
CFED President Andrea Levere says that’s not easy when all your energy goes into paying the rent and buying food.
“It’s only when you have those basic needs satisfied that you then can think, ‘How do I make sure I have the best education for my children? How do I make sure I have the skills I need to be more competitive in the workplace?’”
The CFED and other companies are stressing better savings techniques for many Americans across the country.
Robin McKinney, a former social worker and president of Maryland CASH, told National Public Radio that low wages are a problem, but government rules also have a negative effect – such as a Maryland state law that prohibits public assistance to anyone with more than $2,000 in assets.
But many low-income families qualify for large lump-sum payments through the federal earned income tax credit program.
“Our average refund is about $2,200, so that’s already over that $2,000 asset limit,” McKinney says. “So if they didn’t spend that money down immediately, they were at risk of losing their benefits. This is a huge disincentive to savings.”
A December national survey by the Pew Research Center found that a majority of Americans (55 percent) have received government benefits from at least one federal entitlement program.