Most Americans in Financial Recovery Mode: Survey

Fifty-eight percent of U.S. adults say they are in financial recovery mode, but among them, 89% express confidence that they will ultimately achieve a full financial comeback, according to a study released this week by Northwestern Mutual. 

Thirty-four percent said they are in late-stage recovery, having suffered losses but mostly, if not fully, recovered to pre-pandemic levels and feeling confident in their ability to achieve long-term financial security.

Forty-seven percent reported that they are in mid-stage recovery. They suffered losses and have begun making up ground, but have yet to reach pre-pandemic levels and are still optimistic about their prospects for long-term financial security.

Least optimistic are the 18% who said they are in early-stage recovery. They suffered losses, are still in decline and are unclear how they will achieve long-term financial security.

“We’re seeing a nation still reeling from the financial instability that the pandemic has dealt, but there’s also evidence that a promising number of people are on their way back,” Christian Mitchell, chief customer officer at Northwestern Mutual, said in a statement. 

“While it’s great to see progress, it’s also important to recognize that the setbacks are not equally distributed. No matter where people are on their financial journey, they need a roadmap; they need guidance; they need a plan.”

The Harris Poll conducted an online survey on behalf of Northwestern Mutual in March among 2,320 American adults. 

Trending in the Right Direction 

The survey results showed that across a range of different categories, year-over-year numbers indicate that people’s financial lives are trending in the right direction.

• Average personal savings: up from $65,900 last year to $73,100 today.
• Average retirement savings: up from $87,500 to $98,800. 
• Financial security: up from an average of 6.3 on a 10-point scale to 6.5. 

A closer look at savings trends reveals a more nuanced story. Thirty-three percent of respondents say they have been able to save more over the last year, while 31% say they are saving less or have stopped saving altogether. 

Only 9% say they have tapped their savings and are going backward.

“The divide runs deep between those who will emerge from this extraordinary time with better habits and more savings, and those who have struggled greatly and have much more ground to make up,” Mitchell said. 

“Each will carry different needs, challenges and goals. It’s our job to meet people wherever they are and help them to get on — and stay on — track.”

Maintaining Momentum

Pollsters asked survey respondents what they see as the best financial defense against future economic uncertainty or market volatility going forward. 

Thirty percent said the best defense was having an emergency fund/personal savings, and 27% said having a financial plan. Each choice received more than three times the number of responses as any other option, according to the survey. 

The third of respondents who said they have been able to save more in the last year attributed this mainly to reduced discretionary expenses. They also cited prioritizing saving over spending, increased income and reduced living costs/necessary expenses.

Three-quarters of survey participants said they have good clarity on exactly how much they can afford to spend now versus how much they should be saving for later. 

Northwestern Mutual pointed out that maintaining momentum over time will require a long-term view, and noted survey findings that planning horizons today are quite short.

Among the 58% of respondents who said they are in financial recovery mode, only 14% are actively planning more than five years out, while 24% are planning month to month.

“Being prepared for uncertainties may sound simple, but it takes on extra poignancy this year,” Mitchell said. “The goal for many now is how to move forward and maintain momentum.”