Confession: I don't have an emergency savings. I used to, until I actually had to use it—and when that ran out, I turned to my credit card to help me get by, and paying that off keeps me from replenishing my savings. It's scary to think about, but the truth is, if your emergency savings is also nonexistent, you're not alone—and new research from Pew proves it.
According to the study (which tracks data from 1989-2013), more than half of households in the US are savings-limited, as in, they have less than one month of their income in their checking or savings accounts. By contrast, the Pew report says that financial advisors suggest keeping 3 to 6 months of income in savings, just in case.
Instead, the research found that the typical household at the bottom has access to less than two weeks (9 days, on average) of income. Even the households with the highest incomes in the study could only replace about 52 days of income from liquid savings. And when pooling all of their financial resources together, the typical household could replace only about 4 months of lost income.
The study found that most US households aren't prepared for emergency situations as a result, and that to make ends meet they would likely wind up using their credit or even liquidating their investments and retirement accounts, if possible. Those without access to such options would have an even harder time.
Along with the discovery that 55 percent of US households are savings limited, Pew also found that just under half (47 percent) of households are income-constrained, which means that they believe their household spending is either equal to (or more than) their income. Another 8 percent reported that their debt obligations take up 41 percent or more of their income.
Overall, 70 percent of US households face at least one of those three challenges, with another 29 percent facing two, and 3 percent facing all three.
The research concluded by noting that this is also not a new development, stating, "While the most recent recession shined a spotlight on the fragility of family balance sheets, the downturn alone did not cause households' financial insecurity; many of the indicators explored here have been stable for the past 30 years."