Financial struggles are a significant issue for many American households with incomes less than $75,000, despite the higher consumer confidence reported by the Conference Board Index. A survey from Assurance IQ found that Americans aged 50 and older with incomes in this range are particularly concerned about their financial well-being, with almost half worried about maintaining their standard of living if they were to die. This could lead to ongoing financial hardship for these families as unexpected costs get passed on to future generations.
The survey revealed that many Americans aged 50 and older with incomes less than $75,000 are facing challenges such as struggling to pay bills, affording health insurance deductibles, paying bills late, and avoiding medical care due to cost. Additionally, nearly 30% of respondents said they would not be able to cover a future unexpected medical expense without affecting their ability to pay monthly bills. Household balance sheets for lower- and middle-income individuals are deteriorating due to inflation, rising interest rates on credit cards and personal loans, making it difficult for them to manage their finances.
It was found that a significant number of people aged 50 and older earning less than $75,000 are not taking essential steps to protect themselves and their families financially. Only 46% have drafted a will and just 36% have purchased life insurance, with most having death benefits of less than $50,000. Many individuals in this income bracket find it overwhelming to think about long-term financial planning when they are focused on day-to-day living and struggling to make ends meet.
The financial services industry has often overlooked lower-income households who are in most need of support, according to the Assurance IQ report. Financial advisors typically charge fees based on assets under management, making it more lucrative for them to work with clients who have substantial assets. However, there are advisors who do take on lower- and middle-income clients by charging hourly fees or offering services pro bono. Some employers are also stepping up to help their employees by offering emergency-savings accounts linked to 401(k) retirement accounts for those with incomes below $150,000.
Despite the availability of resources such as emergency-savings accounts and financial coaching programs, many lower- and middle-income individuals are still struggling to save for emergencies and retirement. Job insecurity remains a significant hurdle for many workers, as they may be hesitant to sign up for these programs out of fear of losing their jobs. Startups like SaverLife, Canary and Commonwealth, and Change Machine are working to provide tools and resources to help individuals in lower-income communities save more effectively and improve their financial well-being. However, there is still progress to be made in addressing the financial challenges faced by these individuals.
