Survey reveals 29% of Americans are withdrawing their savings to cover basic costs of living

10/04/2022 / By Belle Carter

A recent edition of Forbes Advisor-Ipsos Consumer Confidence Weekly Tracker revealed that 29 percent of U.S. consumers have been raiding their savings and not replenishing them as the U.S. economy continues its decline.

The report found “a significant increase in the number of Americans who are withdrawing from their savings more than usual and investing or saving money less than usual.”

“Americans who report a change are exercising caution. Those who say they spend money, borrow money/use credit, invest/save money, and pay off their loans/credit more than usual are outnumbered by those who say they do these things less than usual,” it stated.

The analysis also provided that there has been an increase in the number of people who said they are saving less than usual – up eight points to 46 percent. It also indicated an “increase in the percentage of those who are now drawing from their savings more than usual” – up eight points to 29 percent. The said figures have been recorded at the highest point since tracking the data started.

The results were based on data from an Ipsos survey conducted September 19-20 with a sample of 942 adults aged 18-74 from the continental U.S., Alaska and Hawaii.

Forbes Advisor staff Natalie Campisi said in an article that it is not surprising for people to squirrel away less while dipping into their reserves as the dollar’s purchasing power weakens. “The pernicious combination of inflation, aggressive interest-rate hikes by the Federal Reserve, and a significant jump in household debt in the second quarter of 2022 have paved the way for major financial hurdles,” Campisi pointed out.

Andre Jean-Pierre, an investment advisor at Aces Advisors Wealth Management in New York, leaning on short-term savings while battling the persistent inflation might be unavoidable. “It’s likely the most responsible way to pay for necessary expenses,” Jean-Pierre said, adding that the real problem in a rising-rate environment is racking up credit card debt.

“The average interest rate on a credit card account that’s assessed interest was 16.65 percent in May 2022, which is two points higher than at the beginning of the year,” she pointed out. “In America, where many households are living paycheck to paycheck, the impact of inflation is felt daily,” Jean-Pierre said. “But adding increasing interest by paying with credit can have a cascading effect on your financial life.”

A lot of factors are making Americans resort to their emergency funds. Critics are saying that the current situation alarms people into thinking that they are in a “state of emergency,” after going through the Wuhan coronavirus (COVID-19) pandemic and battling its aftermath on health, finance, commodities and economy. (Related: Survey reveals that more Americans are worried about their savings due to rising inflation rates.)

Americans spent over $600 from savings on average during first half of 2022

According to insurance company New York Life’s Wealth Watch Survey, Americans withdrew around $617 from their savings account on average from the beginning of January through the end of June to cover everyday expenditures.

The poll engaged over 2,000 Americans and asked about their current short- and long-term financial goals, their progress toward these goals and overall feelings of financial security. It indicated that about 40 percent are worried about their ability to pay for groceries – as the cost of groceries increased over 12.2 percent from a year ago – and more than a third say they would not be able to pay their monthly bills.

While 64 percent of the adult survey participants reported being confident that their retirement savings will last them their whole lives, that figure actually represented a decrease from 74 percent in January.

“The financial picture for many Americans has changed significantly since the start of the year and we are seeing the positive expectations many Americans held about their finances heading into 2022 start to fade,” Aaron Ball, senior vice president at New York Life, said.

Visit DebtCollapse.com for more news related to the country’s weakening economic status.

Watch this video that talks about Americans spending more and getting less.

This video is from the NewsClips channel on Brighteon.com.