New survey research conducted by the Dornsife Center for Economic and Social Research (CESR) at the University of Southern California, with sponsorship and support from the Society of Actuaries, the National Institute on Aging, and the Social Security Administration, shows a significant portion of older Americans carry less than $1,000 in liquid emergency funds.

According to the data gathered by researchers Leandro Carvalho, Arie Kapteyn, and Htay-Wah Sawnearly, half of survey respondents overall suggest they face routine and significant financial stress, with most reporting they had faced such stress within the prior three years. The research also suggests that even those with sufficient resources to meet their predictable retirement needs can often run into problematic cash crunches.

“When asked about how hard it would be for them to pay for an unexpected expense of $1,000, fewer than a third say they could easily pay for this expense,” researchers warn. While the percentage who could easily pay this sum was somewhat higher for older adults than for the general population (39%), this is still an unsettling figure from a financial-health perspective, especially given that for many, high-interest credit cards or payday loans are the only ready sources of cash.

“It is notable that many older adults carry debt—such as credit card, student loan or mortgages—potentially undermining their financial security,” the report warns. “Mortgage debt is of particular significance because homes comprise the largest component of net worth of many older adult households.”

Findings show most savers understand that financial decisions such as refinancing a mortgage, managing investments or retiring, “are complex and have long-term consequences.” Yet, “as seen in the [previous edition of this research] and confirmed here, a large fraction of respondents do not seek advice when deciding whether to refinance their mortgage or how to invest their retirement savings.”

Despite this, a number of positive signs come out of the research. Notably, younger and middle-aged respondents are more likely to carry credit card balances than the oldest adults surveyed—a sign that financial stability generally improves over time. 

“Use appears to be modest for such alternative financial services as payday loans, deposit advances or cash advances on credit cards among the older population as well,” according to the research. Overall, only 16% of respondents have taken a cash advance on one of their credit cards in the last three years and fewer than 5% have a payday loan.

Of particular interest for retirement advisers is the fact that almost half the respondents reported experiencing major financial stress in the preceding three years, with higher rates among the younger. Six in 10 respondents with financial stress sought advice in dealing with it.

The full report is online here.