About three-quarters of households in the U.S. fall short of having enough money to survive financial setbacks and reach major life milestones, according to a new report by The Aspen Institute. These include having six weeks of take-home pay in savings and being able to support their families’ physical and mental health, pay for college education, be homeowners and have retirement security, the think tank’s report shares.
Their research shows that about 34.5-million households across the country fall below this “essential wealth” benchmark. "The fact that most households fall short of that, we think, is a signal for a lot of the financial frustrations, the financial nihilism that we're seeing nowadays," explains Steven Brown, director of insights and evidence for The Aspen Institute's Financial Security Program. "People feel like they can't get ahead, and that they don't have enough."
Aspen also analyzed how much a typical household would need to meet their “essential wealth” threshold, and it goes up with age.
- For those ages 18 to 29, it’s $40-thousand, which they call “a down payment’s worth of wealth.”
- Those between 30 and 39 need $120-thousand, which is 30% of median home sales price and six weeks pay in liquid savings.
- For 40 to 49-year-olds, the threshold is $265-thousand, or enough to build a net egg based on three times income in net worth and six weeks pay in liquid savings.
- Those 50 to 65 need $530-thousand to grow the nest egg, based on six times income in net worth and six weeks pay in liquid savings.
- And for those 65 and older, it takes $775-thousand for a couple with no mortgage to give them retirement stability.
Source: CBS News