Consumers have notably focused on savings in the volatile economic environment brought on by the coronavirus pandemic.
The U.S. personal savings rate, a measure of the percentage of disposable income saved by households, skyrocketed to 33.6% in April, up from 12.9% in March, MagnifyMoney reported Wednesday.
Researchers examined savings and retirement data from before and after the crisis erupted in order to determine how the pandemic has altered American consumers’ savings.
According to the report, the 160.5% month-over-month increase in savings indicates that consumers used unemployment benefits and economic impact payments to supplement their savings accounts after the pandemic erupted and unemployment soared to record levels.
Monthly unemployment insurance benefits spiked to nearly $24 billion in May before dropping to $16 billion in August, MagnifyMoney said. And the personal savings rate has dropped monthly since April to 14.1% in August.
According to the report, 31% of American households report that they or someone in their family has used all or most of their savings during the coronavirus crisis.
Researchers found that the average American household had a bank account balance of $41,700 in 2019, down 3% from 2016. The median bank account balance for households was $5,300 in 2019, up 11% from 2016.
The average American household had a $255,200 balance in a retirement account in 2019, up 5% from 2016. The median retirement account balance for households was $65,000 in 2019, up 2% from three years earlier.
Half of U.S. consumers think they should have $10,000 or more in emergency savings, according to the report but more than half say they have only $3,000 or less combined in their savings and checking accounts.
“A high percentage of consumers don’t have the emergency savings that they think they need, which is even the case for those with incomes of up to $70,000,” Ken Tumin, founder of DepositAccounts, said in a statement.
“This shows that it takes more than just higher income to be financially prepared for unexpected problems.”
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