Seniors in Better Savings Position Than Younger Generations
Consumers at or over the age of 62 reported less difficulty in paying for a bill or expense, though other factors including household income and whether or not they live in metropolitan areas also affected the standing of a person’s savings. This is according to the “Making Ends Meet Survey” conducted by the Consumer Financial Protection Bureau (CFPB), which recently released results.
“Consumers under age 62 were nearly twice as likely to report having difficulty paying a bill or expense than consumers 62 and older,” the survey results read. “Respondents with lower incomes were more likely to have difficulties, but 18% of respondents in households with annual income of more than $100,000 reported having difficulty paying a bill or expense in the previous year.”
Respondents of the survey who live in metropolitan areas were less likely to have problems paying a bill or other expense compared with non-metro respondents, but the difference between the respondents living in those environments is “relatively small,” according to the CFPB.
Other, more significant disparities between the savings position of respondents emerge when looking at divides between racial classifications, according to the research.
“On average, African Americans were more than twice as likely as non-Hispanic whites to have difficulty paying a bill or expense,” the research results read. “The difference in the estimates between African Americans and other groups persists even when controlling for income, age, gender, education, and rural status.”
There are “many reasons” why this disparity exists, the CFPB says, but evaluating the reasons that are most important extend beyond the scope of this specific research.
Different household events and exposure to economic shocks also contribute to increased difficulty in paying for an expense. The economic shock that carries the biggest disruption for the majority of respondents is a bout of unemployment, followed by child care.
“People who reported that a household member had a period of unemployment had difficulty 69% of the time, nearly double the average. People who reported a reduction in work hours, working less because of illness or injury, or an increase in child care or dependent care expenses were similarly much more likely to also report having difficulty paying a bill or expense in the previous year.”
Additionally, people are exposed to further economic risk if they have variable monthly income, the research says.
“Almost one quarter of U.S. consumers report that their income changes ‘somewhat’ or ‘a lot’ from month to month,” the research says. “Having difficulty paying a bill or expense is more common among those with variable income. 49% of households whose income varies reported having difficulty at least once in the last year, compared to only 37% of those whose income does not change from month to month.”
Article by Chris Clow on reversemortgagedaily.com