In its new Report on the Economic Well-Being of U.S. Households, the Federal Reserve Board provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they face, based on responses to the Board’s 2013 Survey of Household Economics and Decision Making. The report provides insight into numerous topics of current relevance to household finances, including: housing and living arrangements; credit access and behavior; education and student loan debt; savings; retirement; and health expenses.
Overall, the effects of the recession continued to be felt by many households, with 34 percent reporting that they were somewhat worse off or much worse off financially than they had been five years earlier in 2008 and 34 percent reporting that they were about the same.
The outlook for the housing market among homeowners appeared mixed. Less than 10 percent of homeowners expected house prices in their neighborhoods to decline over the 12 months following the survey. Many renters seemed to express an implied interest in home ownership, as the most common reasons cited by renters for renting rather than owning a home were an inability to afford the necessary down payment (45 percent) and an inability to qualify for a mortgage (29 percent). 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 percent of survey respondents had applied for some type of credit in the prior 12 months, one-third of those who applied for credit were turned down or given less credit than they applied for. Moreover, 19 percent 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. Experience and expectations with credit appear to vary by race and ethnicity. However, this effect is partially explained by other factors correlated with race/ethnicity and credit, such as education levels.
As of September 2013, education debt of some kind was held by 24 percent of the population, with 16 percent having acquired debt for their own education, 7 percent for their spouse/partner’s education, and 6 percent for their child’s education. 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, with 18 percent indicating that they were behind on payments in some way for their education debt, including 9 percent with loans in collections.
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 percent of those ages 55 to 64. Additionally, almost half of adults were not actively thinking about financial planning for retirement, with 24 percent saying they had given only a little thought to financial planning for their retirement and another 25 percent 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 percent didn’t know how they will pay their expenses in retirement.
The Great Recession pushed back the planned date of retirement for two-fifths of those ages 45 and over who had not yet retired, and 15 percent of those who had retired since 2008 reported that they retired earlier than planned due to the recession. Among those ages 55 to 64 who had not yet retired, only 18 percent plan to follow the traditional retirement model of working full time until a set date and then stop working altogether, while 24 percent expected to keep working as long as possible, 18 percent expected to retire and then work a part-time job, and 9 percent expected to retire and then become self-employed.
The survey was conducted on behalf of the Board by GfK, an online consumer research firm. Data collection began September 17, 2013, and concluded on October 4, 2013. Just over 4,100 respondents completed the survey. The report summarizing the survey’s key findings may be found at: www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf