More Than Half of American Families Do Not Have a Financial Safety Net, EARN Research Institute Poll Shows

54% of Families Would Fail to Meet Basic Financial Needs If Income Was Disrupted for Three Months or More

43% Report They Would Tap Into Retirement Savings

According to the EARN Research Institute, 46% of American households overall would not be able to meet basic financial needs after three months in the event that outside income stopped; this figure compares with 64% of low-income households (defined as those with annual household earnings of $35,000 or less). (Graphic: Business Wire)

SAN FRANCISCO--()--A nationwide poll commissioned by the EARN Research Institute, revealed that more than half (54%) of American households across all income brackets do not feel they could meet their basic financial needs if income was disrupted for three months or more. Among low-income families (defined as those with annual household earnings of $35,000 or less), that figure rises to 64%.

This latest poll from the EARN Research Institute shows asset-building conditions worsening across America. A similar nationwide poll conducted by EARN in June 2010 demonstrated that a majority (51%) of American households reported having enough savings to cover basic expenses for more than three months; just six months later, that number has dropped to 46%. This underscores the significance between “income poverty” and “asset poverty,” or households having the financial reserves to get by on the federal poverty level for three months vs. living one paycheck, broken refrigerator, or medical emergency away from requiring public assistance.

Asked where they might obtain the funds necessary to meet basic household financial needs in the event of circumstances such as job loss or catastrophic illness, 65% of those polled reported they would dip into their savings accounts. Perhaps more surprisingly, 43% of those polled suggested they would make early withdrawals from 401 (k) or other retirement accounts. 35% of the youngest adults of those surveyed (aged 18-34) suggested they would rely on credit cards.

“As the recession continues unabated, it has become bracingly clear that America’s families do not have the means necessary to weather long-term financial adversity,” said EARN President and CEO Ben Mangan. “This nationwide poll underscores the importance of savings, regardless of income level. EARN’s asset-building solutions have helped thousands of low-income workers to save money in ways that have made substantial positive changes in their lives. We founded the EARN Research Institute to promote financial services for low-income workers and change perceptions about how to address the plight of America’s low-income families.”

Optimistic Jobs Forecast

If the survey suggested a bleak picture around savings and Americans’ financial safety net, things looked sunnier concerning the nation’s belief in future job creation. The EARN Research Institute poll found 66% of participants feel that employment opportunities will improve somewhat or very much over the next year, with 38% expecting an uptick to occur over just the next few months.

America’s low-income families and minorities were equally optimistic, with 65% of those polled with household yearly incomes of less than $35,000 believing a jobs recovery will occur over the next year (with 44% feeling it will happen in the next few months); 75% of African Americans maintaining employment conditions will improve in 2011 (with 49% over the next few months); and 70% of Hispanics believing the jobs turnaround will occur next year (with 37% believing it will happen in the next few months). The EARN Research Institute poll found that annual household income and education levels had little impact on national polling figures.

“Monthly unemployment figures have been consistently downbeat, but the kind of positive momentum demonstrated by this poll is difficult to ignore,” says Mangan. “It rests in the hands of our elected officials to capitalize on that optimism through job creation policies that foster a healthier environment for better employment opportunities.”

Survey Research Methodology

These statistics are derived from findings of a telephone survey conducted among a national probability sample of 1,006 adults comprising 501 men and 505 women 18 years of age and older, living in private households in the continental United States. Interviewing for this CARAVAN® Survey was completed during the period November 18-21, 2010. EARN expects to continue conducting national surveys on a host of issues including asset building, saving rates among Americans and personal finance tools for low-income families.

About EARN

EARN is an award-winning nonprofit organization that gives low-income workers the power to create economic prosperity for their families for generations to come. Since 2001, EARN has helped tens of thousands of low-wage families through innovative financial products including matched savings accounts, checking accounts for the unbanked, micro-loans, and money management coaching. EARN’s powerful combination of lasting assets and financial know-how enables families to build wealth and achieve life-changing goals such as saving for college, purchasing first homes, or starting small businesses. Through its policy and research arm, EARN evaluates its impact and reports on new data regularly, sharing lessons learned and best practices in order to transform the financial services landscape and to champion effective public policies. EARN’s ultimate vision is that millions of well-informed, low-income American families will achieve financial success through proven strategies, fair public policy, and their own hard work. Visit www.earn.org or follow us at http://twitter.com/earn and http://facebook.com/EarnOrg.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6536021&lang=en

Contacts

EARN
Amanda Byrd, 415-240-4477
amanda@earn.org
or
Andrew Conn, 646-805-2023 or 347-835-1912
aconn@rlmnet.com

Release Summary

EARN Research Institute national poll finds 54% of American households wouldn’t be able to meet basic financial needs for 3 months if income were interrupted – troubling news as unemployment rises.

Contacts

EARN
Amanda Byrd, 415-240-4477
amanda@earn.org
or
Andrew Conn, 646-805-2023 or 347-835-1912
aconn@rlmnet.com