The Top 10 Most Shocking Personal Finance Statistics
After recently reading a slightly dated report on personal finance statistics, I simply had to opine and wonder exactly why these stats have to be so shocking. Check these out for yourself; how many of these statistics apply to you? Make sure you keep reading GradMoney for more tips and never be afraid to reach out for help -- we are here for you!
1) Regardless of income, 70% of US citizens are living "paycheck to paycheck" (The Wall Street Journal) - The amount of debt levels among young people will likely ensure that this statistic remains static in the coming years unless something can be done about student loan debt and the cost of an education.
2) 40% of Americans will never gain a net worth in excess of $10,000 (American Dream Education Campaign) - When it's all said and done, it does not matter how much you have saved in retirement, if your debt levels are greater than what you have saved, your net worth will remain in the red.
3) More than 50% of pre-retirees underestimate their life expectancy; 40% of Americans are counting on the lottery, sweepstakes, getting married, or an inheritance to fund their retirement (Walter Updegrave, Senior Editor, Money Magazine) - Social Security was created at a time when the average life expectancy was around 55; if you somehow managed to live to 65, then you could retire comfortably. Today, the average life expectancy is closing in on 80 years. How will you be able to fund those additional 15+ years without the help of government social programs? Relying on inheritance, marrying for money, or winning the lottery are NOT valid retirement plans.
4) 62% of college graduates will have a student loan debt averaging $27,236, totaling $101 billion nationwide (Student Monitor) - This number just keeps growing; the total amount of student loan debt today is closing on well over $1 trillion, and much of it will be insolvent.
5) More than half of all college students have accumulated over $5,000 in credit card debt while in school, and one-third have more than $10,000 debt on credit cards (Sallie Mae) - There is virtually no financial literacy taught in high school, so students are not at all prepared to handle the costs associated with college. Books, tuition, room & board, plus all travel and food -- it adds up while in college so many get a ton of credit card debt on top of student loan debt.
6) By the year 2050, one-third of the workforce will have no money saved in a 401K plan (Government Accountability Office) - This just should not be; if you work for a company that offers a 401K plan, no matter what your expenses look like, USE IT! I can personally attest that doing so has given me enough emergency savings to survive when I was unemployed for a time.
7) The Social Security Trust Fund is projected to be exhausted by 2033 (when a 20-year-old today reaches age 41). After that, SSA taxes will be sufficient to cover only about three quarters of scheduled benefits through 2086 (Social Security Administration, 2012) - Students carry so much debt, and yet by the time they retire there will be nothing left in social security to help keep them afloat. Young people today MUST start saving as soon as possible.
8) Only 11% of workers under age 35 currently participate in their companies’ 401K programs (American Institute of Public Accountants) - See number 6 above; no matter what your age, you MUST start saving in a 401K if you company offers one. There is simply no other way to survive retirement without some kind of savings today.
9) 81% of young adults grossly underestimated the length of time it would take to pay off a credit card balance, and 79% fail to pay off their credit card balances in full each month. (Center for Economic and Entrepreneurial Literacy) - No financial literacy taught in high school? No hope for being prepared for the hardship of credit card debt. Preparation is SO important.
10) The top reason students give for dropping out of college is financial constraints (Public Agenda). - It's sad but true; most students don't flunk out of college. Ultimately, they simply cannot afford it and either have to wait until they can afford it again...or can simply settle for low(er)-paying jobs.