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Nearly 40% of cash-strapped Americans can’t last a month on savings

A Kelly Center for Hunger Relief volunteer sorts through food for distribution as residents in vehicles wait in line at a church in El Paso, Texas, on July 17.

Joel Angel Juarez/Bloomberg via Getty Images

A large share of Americans who lost income during the coronavirus pandemic have little in savings — leaving them with few options in a worst-case scenario.

Thirty-eight percent of people who have lost a job or had their income reduced due to Covid-19 couldn’t last more than a month off of savings of any kind, according to a bi-monthly survey published by SimplyWise, a technology company that helps people make Social Security decisions.

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More alarming still, about 1 in 5 people couldn’t last more than two weeks off of their savings, such as an emergency stash or money earmarked for retirement, the company found.

The statistics are a sobering reminder that many Americans are teetering on the edge of financial ruin, at a time when millions of workers remain unemployed, the economy limps along and the coronavirus pandemic rages on.

‘No good answer’

“What are these people supposed to do?” said Allie Fleder, chief operating officer of SimplyWise. “There’s just no good answer to this.”

Meanwhile, sources of financial aid that had provided a respite for many Americans have expired, with no sign of a forthcoming extension.

More than 28 million Americans were collecting unemployment benefits at the end of July, according to the Labor Department. Since April, recipients had been getting an extra $600 a week from the federal government in addition to state benefits. But the extra federal payments ended last month.

Protections for renters and homeowners unable to pay their monthly rent or mortgages have either lapsed or may soon do so — meaning eviction for those unable to meet their obligations.

SimplyWise conducted its online survey of 1,128 American adults in early July. That suggests respondents’ financial situation may have worsened in the intervening time once aid ran dry.  

Without an extra $600 a week in unemployment aid, Americans have been getting just over $300 a week, on average, for the past several weeks. Some are receiving far less — as little as $5 a week.

Losing the $600 weekly boost puts 6 million people at risk of not being able to pay their bills this month, according to a recent survey published by the Morning Consult, a market research firm.

President Trump signed an executive measure to provide an extra $300 a week in “lost wages assistance” but that aid has only been approved in seven states. Restrictions also prevent the aid from going to those getting little from the unemployment system — arguably the people who most need the aid.  

Trump also signed directives earlier this month to extend student-loan relief, give a payroll-tax cut to workers and extend eviction protections. However, they likely won’t amount to much by way of actual relief or protection, with the potential exception of the student-loan measure, experts said. 

Sixty-one percent of people who lost their job due to Covid-19 couldn’t come up with $500 in cash without selling something or taking out a loan, according to the SimplyWise survey — potentially helping tie over the needy but also putting them in debt. (That compares with 42% of Americans overall.)

Uncertainty for seniors

Of further concern, about 20% of Americans in their 60s lost their jobs or were furloughed as of early July, according to the survey.  

These individuals will likely have a tougher time than others finding a new job, Fleder said, at a time when work is hard to find. There are currently three unemployed workers for every available job, according to the Bureau of Labor Statistics.

These individuals may be forced to retire early and claim Social Security, absent other savings to rely on, Fleder said.

That could significantly alter the scope of their retirement, since delaying Social Security as long as possible (until age 70) is one of the best financial moves a retiree could make.

“The uncertainty for the average American, and especially for the older American, is just overwhelming,” Fleder said.

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