Fed Finds 22% Of American Adults Can't Pay Their Monthly Bills; 41% Have Less Than $400 In Cash

The Fed's latest Annual Report on the Well-Being of U.S. Households is out, and there's both good news and bad...

But first, a few of the high(or rather low)lights:

  • One-third of those with varying income, or 10 percent of all adults, say they struggled to pay their bills at least once in the past year due to varying income
  • Over three-fourths of whites were at least doing okay financially in 2017 versus less than two-thirds of blacks and Hispanics.
  • Over a quarter of young adults ages 25 to 29, and slightly more than 1 in 10 in their 30s, live with their parents.
  • Over two-fifths of young adults in their late 20s provide financial assistance to their parents
  • Nearly 25 percent of young adults under age 30, and 10 percent of all adults, receive some form of financial support from someone living outside their home.
  • While 8 in 10 adults living in middle- and upper-income neighborhoods are satisfied with the overall quality of their community, only 6 in 10 living in low- and moderate-income neighborhoods are satisfied
  • Seven in 10 low-income renters spend more than 30 percent of their monthly income on rent

Now, the good news.

The report, based on the Board's fifth annual Survey of Household Economics and Decisionmaking, provides a story of "overall improvement consistent with the national economic expansion." Overall, 74% of the more than 12,000 respondents reported that they were either "doing okay" or "living comfortably" in 2017, which is 4% better than last year's report, and 10% higher than the first survey conducted in 2013. 

Broken down by race and education, 77% of whites say they are doing okay financially compared to 65% of blacks and 66% of hispanics. As expected, level of education attained is a factor as well - with higher educated respondents doing better than those with a high school degree or less.

Similarly, fewer people are finding it difficult to get by vs. five years ago, with about 7% of adults reporting financial hardship vs. 13% in 2013.

Broken down by income, the highest percentage - or 94% of those who responded that they are at least doing okay financially have more than $100,000 in household income - so hardly a surprise there - while only 56% of Americans making less than $40,000, which is roughly half the US population - can say the same. That also means 44% of Americans making under $40,000 are not doing OK financially.


Which brings us to the not so good news.

Almost nine years into an economic recovery, 41% of adults in 2017 are unable to afford an unexpected $400 expense without borrowing money or selling somethingdown from 44% last year.

When faced with a hypothetical expense of only $400, 59 percent of adults in 2017 say they could easily cover it, using entirely cash, savings, or a credit card paid off at the next statement (referred to, altogether, as “cash or its equivalent”).

Even without an unexpected expense, the report reveals, 22% of adults expected to forgo payment on some of their bills in the month of the survey. "One-third of those who are not able to pay all their bills say that their rent, mortgage, or utility bills will be left at least partially unpaid."

Altogether, one-third of adults are either unable to pay their bills or are one modest financial setback away from financial hardship, slightly less than in 2016 (35 percent).

Race and level of education reveal that the least educated are the most unlikely to be able to fully pay their current month's bills, while blacks and hispanics are worse off than whites at all levels of education.


This year's survey sought to understand how the opioid crisis may relate to economic well-being, finding that "About one-fifth of adults (and one-quarter of white adults) personally know someone who has been addicted to opioids." Education breakdown doesn't make much of a difference when it comes to people personally exposed to the opioid epidemic, however whites were disproportionately affected when broken down by race.

When it came to retirement savings, 60% of working adults don't think their retirement is on track , and a quarter of adults have no retirement savings or pension whatsoever. Meanwhile, 60% of working adults with self-directed retirement savings accounts such as a 401(k) or IRA have little to no comfort in managing their own investments. 

Additionally, retirement savings vary substantially by race and ethnicity. White non-retirees are 14 percentage points more likely than black non-retirees to have any retirement savings, and they are 18 percentage points more likely to view their retirement savings as on track.

When it comes to people's perception of how "on track" their retirement savings is, age and income were major factors. 

76% of those aged 18-29 with $100,000 - $500,000 saved believe they're on track, while just 13% of the same age group with $10,000 or less saved (wishfully) think the same. Meanwhile, 61% of those aged 50 or older with $100,000 - $500,000 saved think they're on track.

When it comes to sources of retirement income, 86% of retirees are receiving Social Security benefits, 56% draw from a pension, and 58% draw from an IRA or 401(k). Broken down by race, 65% of whites draw from an IRA or 401(k) vs. 38% of blacks and 41% of hispanics.


One out of nine Americans decided not to apply for a loan because they thought their credit application would be denied. 25% of those who applied for credit were denied at least once in the last year, while 32% were either denied or offered less credit than they applied for

The rate at which individuals are denied or offered less credit than requested differs by the type of credit application. Thirty-four percent of credit card applicants experienced at least one of these adverse events versus 16 percent of auto loan applicants.

Meanwhile, denial rates also differ by family income and race/ethnicity, with lower-income individuals substantially more likely to experience a denied or reduced credit application vs. those with higher incomes. 

Among applicants with incomes under $40,000, 39 percent were denied credit versus 10 percent ofapplicants with incomes over $100,000. Within each income bracket, black and Hispanic individuals are more likely to report an adverse credit outcome.

When it comes to credit cards, 83% of adults have at least one credit card. 97% of those who make over $100,000 have at least one credit card, while just 65% of those making under $40,000 say the same. By race, 87% of whites have credit cards compared to 70% of blacks and 76% of hispanics.

Meanwhile, 45% of respondents say they didn't carry a balance in the last 12 months, while 48% say they have at least some, most or all of the time.

Overall, not much has changed significantly from last year's report - aside from a ton of metrics offered by race that weren't included in previous years. What it reveals is obvious; despite the overall economic recovery, now the second longest in US history - a startling number of Americans still can't afford basic emergency outlays, have little to no retirement savings and face a devastating life of poverty in old age.