Last week the Federal Reserve released a disturbing report (PDF) on the financial state of U.S. households. The report’s main findings, that Americans don’t save very much, weren’t that surprising. For the last few decades middle- and lower-middle-class families have been pinched by stagnant incomes and higher spending. But even the many members of the upper middle class are hardly saving. Low or no savings leaves them, and everyone else, in a risky position.
Just 45 percent of upper-middle-class households (income from $75,000 to $99,999) saved anything in 2012, according to the Fed study. That means the other 55 percent didn’t save for a house, retirement, or education. About 16 percent spent more than they earned and went further into debt. The report highlights the consequences of these hand-to-mouth habits: Only half of these households had enough savings to finance three months of living expenses if they lost their job or couldn’t work. A $400 emergency would force about 20 percent of them into months of debt.