COVID-19 Made All of Us More Broke – Here’s How We’re Struggling with Money at Every Age

Shot of two men working on a project together at home.
PeopleImages / Getty Images

A large number of Americans have less than $300 in savings, an amount lower than in previous years — and the biggest financial obstacles, including the pandemic, living paycheck to paycheck, debt and budgeting, vary among generations, according to a new GOBankingRates survey.

See: Women’s Savings Are Shockingly Low – Inside the Gender Money Gap Made Worse by COVID-19
Find: New Survey Finds that COVID-19 has Changed How We Think About Money

The survey finds that 40% of Americans have less than $300 in savings — a drop compared to the pre-pandemic figure of $400 in savings used by the Federal Reserve as a gauge for measuring households’ financial well-being.

Here is a breakdown of the biggest obstacles and how they affect different age groups:

See: How to Rebound from a Bad Financial Year – 2020 Edition
Find: Dave Ramsey Doesn’t ‘Believe in a Stimulus Check’ – and in One Key Way, He’s Spot On

COVID-19 Pandemic

A larger share of young respondents reported that their finances were affected by the COVID-19 pandemic, and the most affected age group was the 25-to-34 group, with 74.65% saying they have been affected, according to the survey.

Make Your Money Work for You

The least affected age group was the 65-and-over age group, with only 33.82% being affected by the pandemic.

Andrew Murray, GOBankingRates’ content data researcher, says that this can be attributed to the younger age groups being active in the workforce. “If you are 65 and up, you are more likely to be retired and thus less affected,” he says. When it comes to the younger groups, those 25 to 34 may be struggling to find jobs due to the pandemic or may’ve been let go due to the pandemic.

See: 10 Times Taking a Pay Cut Can Make You Richer
Find: How to Approach Your Job Search with Renewed Energy

Building Savings

The survey notes that the 55-to-64 age group appears to be struggling the most with building savings. Indeed, 54.95% reported that they have $0-$300 in savings, and 18.02% reported that they had no savings to begin with when the COVID-19 pandemic hit.

“These are the people who are the closest to retirement, so it is quite jarring to see that they have been struggling to build their savings,” says Julia O’Brien, associate researcher at GOBankingRates. “Yet they were probably near their peak earnings period during the 2008 financial crisis/recession, and we know that had a drastic effect on people’s savings and retirement plans. It could be a lingering effect of 2008 or the fact that real wages for the average American have not moved in over a decade,” she adds.

Nishank Khanna, chief financial officer at Clarify Capital, tells GOBankingRates that for many Americans, income decreases after retirement. “For those relying completely on Social Security, income can be a huge barrier. Healthcare can continue to be an expense for many, making saving difficult,” he says.

See: Pandemic Widens Retirement Planning Gender Gap
Find: COVID-19 Is Changing How (and Whether) We Take Care of Ourselves – and Our Healthcare Dollars Tell the Story

Living Paycheck to Paycheck

Living paycheck to paycheck is the most common obstacle to savings for all age groups except one, the 65-and-over group. The survey notes a comparable share of respondents in all other age groups reporting living paycheck to paycheck: about 35% to 43%.

Breaking down these findings further, the most affected age groups are the 55-to-64 and the 25-to-34 age groups, with 42.34% and 41.78%, respectively, living paycheck to paycheck.

See: 20 Jobs with the Most Financial Security
Find: A ‘Staggering’ 2.6 Million Women Have Left the Workforce Since the Pandemic Started

Make Your Money Work for You

Savings Accounts

Another key finding is that for the 65-and-over age group, the biggest obstacle is a low savings account interest rate, as the survey notes that 27.94% of respondents reported this obstacle.

That the 65+ group’s biggest obstacle for saving is their savings account annual percentage yield being too low is not a surprise either, Murray says. “Most are probably retired and thus have no income besides Social Security, so they are dependent on what they have saved to keep them afloat through retirement. And a way to supplement those savings would be to have a savings account with a high APY.”

This issue is not so important for the 18-to-24 age group, with only 15.19% citing it as an obstacle to saving money.

See: Best Savings Accounts of 2021 – High Yields & Low Fees
Find: 12 Must-Have Features All the Best Bank Accounts Offer

Budgeting

Budgeting is a major obstacle to saving for younger respondents. The survey finds that 17.3% of the 18-to-24 year olds, 18.31% of the 25-to-34 year olds and 12.29% of the 35-to-44 year-olds reported that not knowing how to budget is preventing them from saving more money.

GOBankingRates’ Murray says that this could be a simple explanation of practice and finding your routine. “As you grow older, you can form habits about budgeting. It also could be that those who are younger are earlier in their careers and thus making less money, and it is always harder to budget with less money,” he says.

Indeed, the survey notes that only 7.19% of the 45-to-54 age group reports budgeting as an impediment to savings. The figure drops even lower for older generations, with 4.5% for the 55-to-64 age group and 4.41% for respondents 65 and older.

“For those in college, income is very minimal and school-related expenses are high. For those who are just beginning work, there’s an increase in expenses as these individuals are generally no longer living with mom and dad, [are] buying their first car, and in many ways, becoming financially independent,” says Clarify Capital’s Khanna.

See: Where Your Money Should Go to Prepare You for More COVID-19 Restrictions
Find: Essential Money Tips for Surviving the ‘Pandemic Spiral’

Debt

Again, younger generations are the most affected by debt and are citing this reason as a hindrance to saving, according to the survey.

The survey finds that 24.88% of the 25-to-34 age group reports it as a financial obstacle, and the figure stands at 25.14% for the 35-to-44 age group.

Zachary Bachner, financial advisor at Summit Financial, tells GOBankingRates that the 25-to-34 age group is usually fresh out of school and burdened with student loan payments. “This can tighten their budget drastically and not allow for additional savings. Also, this is the age range where many individuals begin buying homes and starting families. Some may prefer to save for a down payment rather than save for retirement or other goals. This is simply a priority issue,” he says.

The sentiment is echoed by many experts who cite student loans as the biggest impediment for this age group.

See: What Biden’s Executive Order on Student Loan Deferments Means for You
Find: Congress Wants Biden to Virtually Wipe Out Student Loan Debt – Here’s What He’s Doing Instead

Clarify Capital’s Khanna says that while this population is primarily gaining in career capital, the wages they bring in are offset by educational costs and higher-than-average discretionary spending.” Student loans are a major and burdensome expense for those who have graduated within the last 10 years,” he tells GOBankingRates.

Interestingly, the youngest age group — 18 to 24 — did not report debt at such a high rate, with only 11.39% reporting it as an obstacle to savings.

As for the older generations, only 11.11% of the 45-to-54 age group, 11.71% of the 55-to-64 age group and 13.24% of respondents 65 and older report it as an impediment to saving.

More From GOBankingRates:

About the Author

Yaël Bizouati-Kennedy is a former full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

COVID-19 Made All of Us More Broke – Here’s How We’re Struggling with Money at Every Age
Close popup Live Richer Newsletter

We're here to help you Live Richer.

Sign up to receive our daily weekday newsletter with the latest finance and lifestyle content.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.