Consumer confidence in the U.S. is higher than in 2020, but many households with incomes under $75,000 are still struggling financially, according to the Financial Well-Being 2024 survey conducted by Assurance IQ. Americans aged 50 and older in this income bracket are particularly concerned about maintaining their standard of living if they were to die, which could lead to ongoing financial hardship for their families.
The survey found that a significant percentage of respondents aged 50 and older with incomes under $75,000 faced challenges such as paying bills, affording health insurance deductibles, paying bills late, and avoiding medical care due to cost. In the event of an unexpected medical expense, many said they wouldn’t be able to cover it without affecting their ability to pay monthly bills.
Household balance sheets for lower- and middle-income individuals are deteriorating due to inflation and rising interest rates on credit cards and personal loans, according to Tim Ogden, managing director of NYU Wagner’s Financial Access Initiative research center. This puts added strain on individuals living on tight budgets, making it difficult for them to manage unexpected expenses.
Many individuals aged 50 and older with incomes under $75,000 are not taking essential steps to protect themselves and their families financially, such as drafting a will or purchasing life insurance. This lack of financial planning can be attributed to the challenges of making ends meet on a day-to-day basis and the overwhelming nature of financial decisions for those in this income bracket.
Employers can now enroll employees in emergency savings accounts linked to their 401(k) retirement accounts if their incomes are under $150,000, under the Secure 2.0 law. However, few employers are taking advantage of this benefit, with only a small percentage planning to implement sidecar accounts or permit penalty-free withdrawals. Job insecurity is also a significant hurdle for lower- and middle-income workers looking to save for emergencies and retirement.
Startups like SaverLife, Canary, Commonwealth, and Change Machine are stepping in to help lower- and middle-income individuals save for emergencies and retirement. These organizations provide tools, training, and partnerships with employers and financial services firms to assist individuals in managing their finances based on their unique situations. Despite these efforts, more support is needed to address the financial challenges faced by lower-income households.
