Most of us go to work every day with the hope that what we do will pay off in the end: a paycheck that lets us keep up with our financial obligations and hopefully enables us to save some money for the future. Unfortunately, there are some challenges holding us back from achieving these goals.
Top 5 challenges to financial security.
So, what seems to be the problem? Why are some of us in America unable to make our finances work for us? Take a look at the top 5 challenges holding us back from reaching our financial goals… and note if any of these apply to you.
1. Debt. Many American workers carry some sort of debt. The most common forms are credit cards, mortgages and car loans. And then there are the Millennials, GenXers and even Baby Boomers who are saddled with student loan debt.
Having debt can make you feel like you’re running on a hamster wheel. You work, pay your bills (including your debt) and then go back to work. The trick here is trying to lower your debt to the point where you can start saving money for the future.
2. Caregiving. According to a TransAmerica survey, 28% of workers have served as a caregiver. Surprisingly, the percentage of workers across the generations who are, or who have been caregivers is very consistent: Millennials – 27%; GenXers – 28%; Baby Boomers – 29%
Caregivers have had to make changes to their work life, such as: using vacation days, missing workdays, reducing their hours, adjusting their schedule and so on. This has affected their income and, subsequently, their financial status. If you know you’re going to become a caregiver, it’s best to create a budget that matches any adjustments you’ll have to make.
3. The Great Recession. The same survey mentioned above shows that two in five workers (41 percent) indicate that they either were “not impacted” (21 percent) or have “fully recovered” (20 percent) from the Great Recession. Thirty-seven percent have “somewhat recovered,” 14 percent have “not yet begun to recover,” and eight percent feel they may “never recover.”
This means a great number of Americans still have a ways to go before they can become financially solvent and/or start to save money. It’s just another challenge faced by every generation – Baby Boomer to Millennial.
4. Low Emergency Savings. Due to some of the reasons already alluded to, most American’s don’t have enough money to pay for unexpected financial setbacks, such as unemployment, medical bills, home repairs, auto repairs and other situations. This causes them to dip into their retirement savings and make things harder in the future.
One-third of Americans have less than $5,000 in emergency savings, yet those savings increase with age: Millennial workers have saved $2,000, Generation X has saved $5,000 and Baby Boomers have saved $10,000 (medians).
5. Spouse/Partner Savings. Among workers who are married or living with a partner, the TransAmerica survey reports that 57 percent say their spouse or partner is saving in a retirement plan and 67 percent are familiar with their spouse’s or partner’s savings, yet only 30 percent are “very familiar.”
Level of familiarity of their spouse or partner’s plan increases with age, with Baby Boomers (70 percent) being the most familiar, followed by Generation X (67 percent) and Millennials (62 percent).
Do any of these top 5 challenges pertain to you? If they do, the TransAmerica Survey also offers recommendations that might help. Check out page 31 of the survey. It could be your first step toward making financial stability a reality.
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