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 48% of U.S. adults say they have enough emergency savings to cover three months of living expenses, according to a 2023 Bankrate survey. Meanwhile, a 2024 Bankrate survey found that just 44% would pay for a $1,000 emergency with savings, while 35% said they’d borrow to cover the cost. 
  • A Federal Reserve study was similarly bleak: It found that just 63% of Americans said they would use cash to cover a $400 financial emergency, while others would resort to other methods, such as borrowing from family or putting the expense on a credit card and paying it off over time.
  • 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 49% of Americans receive health care coverage through an employer, 21% from Medicaid, 15% from Medicare, 6% through individual policies and 8% are uninsured, according to 2022 data from the Kaiser Family Foundation.
  • For a household with median income and employer-provided health coverage, potential health care spending was 11.6% of income in 2020, up from 9.1% a decade earlier, reports the Commonwealth Fund. These figures reflect a combination of employee premiums and plan deductibles.
  • Households headed by a 65-year-old can expect average out-of-pocket costs for medical and long-term-care services of $67,000 over their remaining lifetime, according to a 2022 study by Boston College’s Center for Retirement Research. This $67,000 is on top of what retirees pay in regular insurance premiums. Meanwhile, a 2017 study by the Center found that out-of-pocket medical costs devour 18% of the average retiree’s income. This excludes long-term-care costs. For 6% of retirees, medical costs eat up more than half of their income.
  • Genworth’s 2023 Cost of Care Survey puts the average annual cost of a semi-private nursing home room at $104,025. You might pay $136,875 in California, $118,625 in Florida and $167,718 in New York, but just $63,875 in Texas. Nursing homes in big cities tend to be especially pricey.
  • Cash-value life insurance accounted for 61% of new policies sold to individuals in 2022, vs. 39% for term insurance, according to the 2023 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: Emergencies

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