The report provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they commonly face, based on a 2013 survey of household economics and decision-making from the Federal Reserve Board. The report provides insight into topics that touch on household finances, including housing and living arrangements; credit access and behavior; education and student loan debt; savings; retirement; and health expenses.
The survey found that, as of September 2013, over 60% of households reported that their families were either “doing OK” or “living comfortably” financially. About one-fourth said that they were “just getting by” financially, and another 13% said they were “struggling” to do so.
The effects of the recession also continued to be felt by many households, with 34% reporting that they were somewhat worse off or much worse off financially than they had been prior to the start of the latest recession, in 2008. And 34% reported that they were about the same situation financially compared with pre-recession days.
Notably, the survey results suggest that many households are not adequately prepared for retirement. Thirty-one percent of non-retired respondents reported having no retirement savings or pension, including 19% of those ages 55 to 64. Additionally, almost half of adults were not actively thinking about financial planning for retirement, with 24% saying they had given only a little thought to financial planning for their retirement and another 25% saying they had done no planning at all.
Of those who have given at least some thought to retirement planning and plan to retire at some point, 25% didn’t know how they will pay their expenses in retirement (see “Baby Boomers Stuck in the Middle”). The Great Recession also apparently pushed back the planned date of retirement for two-fifths of those ages 45 and over who had not yet retired. Conversely, about 15% of those who had retired since 2008 reported that they actually retired earlier than planned due to the recession.
Among those ages 55 to 64 who had not yet retired, only 18% plan to follow the traditional retirement model of working full time until a set date and then stop working altogether, while 24% expected to keep working as long as possible. Eighteen percent expected to retire and work part-time, and 9% expected to retire and become self-employed.
The outlook for the housing market among homeowners appeared generally positive, as many homeowners expected house prices in their neighborhoods to increase over the 12 months following the survey. The data suggests 26% of homeowners expect an increase in value of 5% or less, and 14% expect an increase in values of greater than 5%. Less than 10% of homeowners expected house prices in their neighborhoods to decline over the 12 months following the survey.
Many renters seemed to express an interest in homeownership, as the most common reasons cited for renting rather than owning a home were the inability to afford the necessary down payment (45%) and the inability to qualify for a mortgage (29%). Ten percent of renters reported that they were currently looking to buy a home.
The availability of credit was still perceived to be relatively low by some respondents in September 2013. While 31% of survey respondents had applied for some type of credit in the previous12 months, one-third of those who applied for credit were turned down or given less credit than they applied for. Moreover, 19% of respondents put off applying for some type of credit because they thought they would be turned down. Just over half of respondents were confident in their ability to obtain a mortgage, were they to apply.
As of September 2013, education debts of some kind were held by 24% of the U.S. population—with 16% having acquired debt for their own education, 7% for their spouse or partner's education, and 6% for their child's education (see “Linking Student Debt and Retirement Savings”). Of those with loans of each type, the average amount of debt for respondents' own education was $25,750; for their spouse/partner's education, $24,593; and for their children's education, $14,923.
Of those who reported having debt for their own or a family member's education, the average total of all education debt was $27,840, with a median of $15,000. Some households struggle to service this debt, the Federal Reserve says, with 18% of respondents indicating that they were behind on payments in some way for their education debt, including 9% with loans in collections.
Among those in debt for their own education, those who failed to complete the degree or program they borrowed money for were far more likely to report having to cut back on spending to make their student loan payments. Further, this group reported that the costs of the education outweighed any financial benefits they received from the education. The amount of debt acquired, and the self-perceived value of the education, also varied by the type of institution attended, according to Federal Reserve data.
The survey was conducted on behalf of the Board by GfK, an online consumer research firm. Data was collected in September and October 2013. A full copy of the report is available here, and a supplemental appendix is also available.