Where We Stand: America’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:

  • 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.
  • Families with moderate incomes, who had coverage through their employer, were potentially spending 10.1% of income for health care in 2015, up from 6.5% a decade earlier, reports the Commonwealth Fund. This sharp increase reflects a rise not only in employee premium contributions, but also rising plan deductibles.
  • Genworth’s 2017 Cost of Care Survey puts the average annual cost of a semi-private nursing home room at $85,775. You might pay $292,000 in Alaska, $150,198 in Connecticut, $140,525 in Massachusetts and $132,907 in New York, but just $54,750 in Texas and $53,655 in Oklahoma. Nursing homes in big cities tend to be especially pricey.
  • Cash-value life insurance accounted for 60% of new policies sold to individuals in 2016, vs. 40% for term insurance, according to the 2017 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.
  • The top reason Americans give for owning life insurance is to cover burial and other final expenses, according to Limra, an industry research group. Limra also found that 40% of children under age 18 have life insurance—arguably unnecessary, given that children typically have nobody who depends on them financially.
  • Among households with children under age 18, just one out of five have no life insurance, says Limra. Of these households, four in 10 say they would immediately have financial trouble if a primary wage earner died today, while another three in 10 would have trouble keeping up with basic living expenses after several months.
  • Just 39% of Americans have enough savings to cover a $1,000 emergency, according to a 2018 survey. Meanwhile, 36% would have to go into debt to cover the cost, using credit cards, personal loans or borrowing from friends and family. A Federal Reserve study was equally bleak: It found that 44% of Americans either couldn’t cover a $400 financial emergency or, to do so, they would have to borrow or sell something.

Next: Step No. 1: Emergency Plan

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