Today’s Safety Net

PROTECTING YOUR family against financial disaster is vitally important. But it isn’t cheap—and many folks aren’t doing an especially good job:

  • Just 41% of Americans have enough savings to cover a $1,000 emergency, according to a 2020 Bankrate survey. Meanwhile, 37% would have to go into debt to cover the cost. A Federal Reserve study was equally bleak: It found that four out of 10 Americans either couldn’t cover a $400 financial emergency or, to do so, they would have to borrow or sell something.
  • Cash can be a great comfort: A 2017 Consumer Financial Protection Bureau study found Americans with less than $250 in the bank scored just 41 out of 100 in financial wellbeing, vs. 59 for those with $5,000 to $19,999 set aside.
  • Almost half of Americans receive health care coverage through an employer, 20% from Medicaid, 14% from Medicare, 6% through individual policies and 9% are uninsured, according to 2018 data from the Kaiser Family Foundation.
  • For a household with median income and employer-provided health coverage, potential health care spending was 11.5% of income in 2018, reports the Commonwealth Fund. These figures reflect a combination of employee premiums and plan deductibles.
  • Out-of-pocket medical costs devour 18% of the average retiree’s income, according to a study by Boston College’s Center for Retirement Research. This excludes long-term-care costs. For 6% of retirees, medical costs eat up more than half of their income.
  • Genworth’s 2019 Cost of Care Survey puts the average annual cost of a semi-private nursing home room at $90,155. You might pay $105,120 in California, $102,565 in Florida and $139,357 in New York, but just $58,400 in Texas. Nursing homes in big cities tend to be especially pricey.
  • Cash-value life insurance accounted for 60% of new policies sold to individuals in 2018, vs. 40% for term insurance, according to the 2019 Fact Book from the American Council of Life Insurers. Term insurance is far less expensive and typically the best bet for individuals, and yet cash-value policies continue to dominate new sales.

Next: Step 1: Emergency Plan

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