Half of Americans Would Go Broke in a Month If They Lost Their Income

Despite rising employment levels, the vast majority of Americans still face a host of financial challenges in 2023. Nearly 40% of respondents to a recent survey say they have gone deeper into debt this year, and less than half say they are earning enough income to live comfortably.

More than half (51%) say that if they lose their jobs, they will run out of money after just one month. Only one in four say they have enough money to last a year or more.

Clever Real Estate surveyed 1,000 Americans in August, asking about their 2023 and 2024 financial goals and personal finances. Their answers are scary.

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Cutting Spending

The vast majority of Americans (93%) report cutting spending in 2023. Spending on dining out, entertainment and clothing fell by more than 50% in each category. More than a third (34%) say they cut spending on groceries.

In 2024, 88% of Americans expect to cut their spending. Dining out gets the largest reduction (51%), with entertainment (48%) and clothing (37%) cuts close behind. A quarter expects to cut grocery spending next year. (See the best cities for living on Social Security alone.)

Deepening Debt

More than two-thirds of Americans (69%) are worried that they will not be able to afford everyday goods if prices continue to rise. Two-thirds say that a $10,000 windfall would not cover their financial needs. More than a third (35%) expect to be in debt for the rest of their lives.

Required repayments on student loan debts begin next year, following a three-year suspension. A large majority (86%) of borrowers expect the repayments to have a negative effect on their finances. About 40% say they will have to work more to increase income to meet those payments. More than a third expect to run up other forms of debt when payments restart.

Collapsing Net Worth

The combination of inflation and higher debt means a smaller portion of income is going into savings. Almost half of Americans (49%) say they have dipped into their retirement or emergency savings in 2023. That results in little to no net worth.

How big a problem is this? One in four Americans has a net worth of $0 or less, including nearly a third of baby boomers.

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Retirement Is Not an Option

Most Americans (53%) say they are not saving for retirement. More than 60%, including 63% of baby boomers, say that they are unlikely to have saved enough to retire. When asked the earliest age at which they could retire, 60% of non-retired Americans say 70 or older.

In 2023, the maximum Social Security benefit for a 62-year-old retiree was $2,572 a month ($30,864 annualized). At full retirement age, the maximum benefit was $3,627 monthly ($43,524 annually). At 70 years of age, the benefit tops out at $4,555 a month ($54,660 a year).

In order to receive those maximum benefits, someone would have had to be at the top of the Social Security contribution scale for virtually their whole working life. For all but a tiny fraction of Americans, that is a pipe dream.

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