More than half of U.S. households say the American dream is unattainable for them, according to a recent survey of 3200 households with an average income of more than $122,000. When asked to define the American Dream, 82% described it as obtaining financial security for themselves and their family. A third of respondents feel the American Dream is disappearing altogether.
These results, from a MassMutual 2018 study, represent a disturbing reality for far too many Americans who are struggling to get ahead and prepare for retirement while dealing with ever-mounting levels of personal debt. Here’s a look at the debt landscape among those survey participants:
- Mortgage: 64% carried a mortgage with an average balance of $188,795.
- Credit card: 56% reported having credit card debt, average total balance of $10,386.
- Student loans: 26% carried educational debt, with an average balance of $39,903.
How are they dealing with their debt? According to the survey, 70% are prioritizing paying down their loan balances — above saving as much as they can (66%) and coming up with a personal finance plan (61%).
Are they prepared for a financial emergency? Sadly, 8% have no emergency fund whatsoever. Eighteen percent reported less than 30 days of expenses saved, while 26% report one to three months of expenses set aside and 21% report having an emergency fund sufficient for three to six months of expenses.
And their greatest financial regret? The top answer across the board was not starting to save early enough in life.
With debit being prioritized over savings, plan sponsors and advisors can help through robust financial wellness programs that include:
- Stressing the need for an emergency fund (to minimize the chance of going into debt to begin with).
- Education around debt management and improving credit.
- Emphasizing the importance of regular savings — especially at an early age — to reach retirement goals.
- Helping workers establish a sound financial plan, encouraging them to tackle debt while preparing for the future at the same time.
American families are under significant financial strain from many factors including: stagnant wages, debt, and rising healthcare and educational costs. They’re feeling the pressure and as a result, losing their hope for achieving their retirement and other financial goals. It’s important now more than ever to look at the larger picture of employees’ finances, not just their retirement accounts. By taking the broad view, employers and plan advisors can help keep the American dream alive one participant at a time.