The COVID-19 pandemic has created deep financial hardships for millions of American families—many of whom hadn’t recovered from the last recession. Amid record job losses, reduced hours, and wage cuts, the large share of U.S. workers who were already living paycheck to paycheck are now struggling even more to cover basic expenses.
During the Great Recession, the median net worth of families fell sharply, and has yet to fully recover. After peaking in 2007 at $140,000, the median net worth for families with savings dropped to less than $84,000 in 2013. The latest data from the Federal Reserve Board’s Survey of Household Economics and Decisionmaking places the 2016 value at $97,300—roughly equivalent to that in 1997 after adjusting for inflation.
Further, new data from the Fed’s Report on the Economic Well-Being of U.S. Households shows that prior to the pandemic, less than half of Americans had enough savings to afford three months of expenses. And a staggering 37 percent of Americans reported that they would be unable to cover a $400 emergency expense without assistance.
Both having any retirement savings at all and having retirement savings that are self-reported to be “on track” increase with age. Just over 60 percent of 18- to 29-year-olds report having some form of retirement savings, but fewer than 30 percent feel that they are on track with their savings goals. Among Americans over 60, the percentages are 88 percent and 51 percent, respectively. It is no surprise that older Americans tend to have more saved than members of younger generations. But, Americans under 40 today have accumulated less wealth than their parents did when they were the same age.
Preparedness for retirement differs not only by age group but by race and ethnicity as well. White Americans are more likely than Blacks and Hispanics to have any retirement savings, and are more likely to report that their retirement savings are on track. This difference can be partly explained by age, as U.S. racial and ethnic minorities tend to be younger than whites. However, the staggering difference in net worth between whites and minority groups is a reflection of deep inequities in opportunity that have persisted across racial lines.
While savings behavior and ability differs across demographic groups, living in certain locations makes it far easier to save money than others. At the state level, North and South Dakota are the best states for saving money, as measured by a composite score that takes into account income, housing costs, and the unemployment rate. North and South Dakota are among a large group of Midwestern states that score highly across these metrics. Florida, Arizona, and New Mexico, on the other hand, are some of the hardest states to save money due to below-average income and above-average unemployment rates.
To find the best states for saving money, researchers at Self Financial analyzed the latest data from the U.S. Census Bureau, the Bureau of Economic Analysis, Zillow, and the Department of Housing and Urban Development. The researchers ranked states according to a composite score based on the following factors: real per capita personal income, median housing costs as a percentage of median household income, and the historical unemployment rate. For additional context, researchers also calculated the median home price.
Composite scores ranged from 59.35 to 98.20. With a score of 67.70, North Carolina is among the worst states for saving money in the U.S. Here is a summary of the data for North Carolina:
- Composite score: 67.70
- Real per capita personal income: $46,641
- Median housing costs as a percentage of household income: 20.3%
- Historical unemployment rate: Above average
- Median home price: $201,137
For reference, here are the statistics for the entire United States:
- Composite score: N/A
- Real per capita personal income: $50,372
- Median housing costs as a percentage of household income: 21.0%
- Historical unemployment rate: 5.3%
- Median home price: $242,141