With the 2016 presidential election looming just months away, Americans are paying close attention to the economic issues that affect the nation. The economy is consistently ranked as the most important problem facing the nation today, according to a 2016 Gallup poll, with results showing that 39 percent of voters rank economic problems ahead of other issues such as immigration, racism and terrorism.
Economic issues encompass numerous concerns, however, and understanding which specific financial elements Americans’ view as most challenging for the U.S. can offer insight into how Americans are assessing the country’s problems. GOBankingRates’ Financial Burdens Survey reveals what Americans’ believe are the biggest financial problems for the U.S. Survey respondents ranked the country’s financial burdens below from most significant (ranked No.1) to least (ranked No. 6):
- Healthcare costs
- Social Security benefits
- Higher education costs
- Tax increases
- Income inequality
- Military spending
Respondents were also asked questions to obtain demographic information, including political leanings and household makeup. The results show how Americans’ views of the country’s economic challenges reflect which financial issues might have the most immediate effect on them, as well as how challenges are prioritized differently through the lens of gender or political affiliation.
Healthcare Costs Viewed as the Top Burden on U.S. Economy
Healthcare costs in the U.S. are the most worrying economic issue for Americans, the survey found. “Healthcare costs impact every individual, which makes it a huge concern for the country as a whole,” said Kristen Bonner, the research lead for GOBankingRates’ Financial Burdens Survey. “Every age group, with the exception of people under 24 years old and people over 65, chose healthcare costs as most significant more than any other factor.” People’s firsthand experience with the hardships of healthcare costs means many Americans give this issue more weight:
- Healthcare costs were selected as the No. 1 financial burden on the American economy 31 percent of the time, about twice as often as any other option.
- Ranking economic issues on a scale from 1 (most significant) to 6 (least significant), respondents ranked healthcare costs higher than any other issue most frequently, giving it an average rank of 2.45.
The New York Times called America “the most expensive place in the world to get sick” in 2016, and healthcare costs have risen much faster than inflation or personal incomes in recent years.
Although insurance helps mitigate some healthcare costs, medical bills are still a significant financial challenge for Americans. For a quarter of privately insured people, healthcare costs are unaffordable, found a 2015 Commonwealth Fund survey. Additionally, about a quarter of U.S. households have struggled with or been unable to pay a medical bill in the past 12 months, according to a 2016 report from Kaiser Family Foundation and The New York Times.
These medical bills have far-reaching impacts on the U.S. economy. Americans strapped by medical bills have made financial sacrifices including cutting back on spending and putting off major purchases. When high healthcare costs dampen other areas of spending, it can result in less growth in other industries, at times slowing the economy, according to the Department of Health and Human Services.
Social Security Benefits Are the Second Biggest Economic Burden
Social Security is an important benefits program that millions of Americans pay into, but the government program is facing a worrisome lack of long-term funding. Perhaps because of this concern, Americans said that the top economic priority of the next U.S. president should be funding Social Security and keeping this system solvent and intact, according to a recent Harris Poll from the American Institute of CPAs.
As healthcare expenses can rapidly increase later in life, people concerned about how they’ll make ends meet during retirement consider Social Security a major financial burden they face personally. And with thousands of baby boomers retiring every day, respondents in this survey identified Social Security as a top financial burden on the economy:
- Social Security benefits are the No. 2 concern after healthcare costs, with an average rank of 3.34 as a financial burden on the U.S. economy.
- 16 percent of respondents selected Social Security benefits as the top economic burden in the U.S.
“Americans are living longer and taking advantage of their Social Security benefits at a younger age than ever before,” said Bonner. “Current predictions state that the Social Security trust fund will be depleted by 2035 — this prediction becomes even more alarming knowing that one in three Americans has $0 saved for retirement,” Bonner said, referencing a 2016 GOBankingRates survey on retirement savings.
How Americans View College, Taxes and Income Inequality for the U.S. Economy
Other financial burdens on the U.S. economy are half as concerning as healthcare but almost as worrying as Social Security costs. Americans are nearly equally concerned by the country’s higher education costs, tax increases and income inequality:
- The average rankings on a scale of 1 to 6 for higher education costs (3.5), tax increases (3.7) and income inequality (3.9) are close.
- Americans are slightly more likely to name income inequality as the No. 1 burden on the U.S. economy, at 15 percent.
- Smaller portions of respondents named tax increases and higher education costs as the top burdens on the U.S. economy at 13 percent each.
All three economic issues have worsened in recent years. College costs have increased at a rate about 6 percent higher than inflation according to a report from CNBC, resulting in students being saddled with bigger debts. Income inequality levels in recent years have been returning to rates seen leading up to the Great Recession, according to the Federal Reserve. And in 2015, tax revenues reached record highs, with individuals paying a greater share of that revenue through income tax and social benefits taxes, reported CNN Money.
Military Spending Ranked as Least Significant Economic Issue
Military spending is the economic burden that Americans find least concerning for the country as a whole, and it’s also the survey response option that might appear to have the smallest direct effect on Americans’ personal finances. It received an overall average ranking of 4.13 and was selected as the No. 1 financial burden on the U.S. economy by just 11 percent of respondents. Although the U.S. is engaged in or providing support for various military actions around the world, military spending appears to be less of a priority to the survey respondents.
Americans’ Views on Economic Challenges Correlate to Life Stage
When viewing rankings of economic burdens alongside respondents’ ages, the GOBankingRates Financial Burdens Survey reveals some important trends. Overall, when respondents rank a financial issue as most significant to the U.S., they are selecting an economic burden that closely relates to their life stage and correlates with their age.
These results suggest that Americans might be so strained by immediate financial concerns that they have little to no room to worry about other financial burdens affecting the country that impact them personally in less direct ways.
Younger Millennials Anticipate Long-Term College Costs
Among millennials (ages 18 to 34), the younger members of the generation (ages 18 to 24) are most likely to still be in college or trade school and are more concerned with higher education costs than any other age group:
- These college-age young adults are the only age group that didn’t rank healthcare costs as the most significant burden for the U.S. economy.
- Instead, 29 percent selected college costs as the No. 1 financial burden for the U.S. — which is at least twice as much as any other age group.
“Millennials have more than likely not yet experienced major health issues that would directly impact their wallets,” Bonner said. “If they have, they are more than likely still covered under their parents’ insurance or even health plans offered by many colleges and universities.”
Although they have less reason to be concerned with healthcare costs, they are coming up against the challenge of paying for higher education at this life stage. Today’s students are facing the highest college costs ever seen, according to Forbes.
“The current amount of college debt is more than $1 trillion — it is no wonder those who are just going into or coming out of college are naming this the most challenging financial burden,” Bonner said.
Older Millennials Most Concerned With Income Inequality
Older millennials (ages 25 to 34) are a bit ahead of younger millennials in their careers and were more affected by the Great Recession, with many of this group coming of age and entering the workforce during the economic downturn. Reflecting those circumstances, older millennials are having a hard time reconciling their income with their cost of living:
- Older millennials (25 to 34) in particular are worried about income inequality, choosing it as their top economic concern 23.1 percent of the time, more than any other age group.
- The only issue older millennials ranked higher than income inequality was healthcare costs at 28.6 percent.
The stressful effects of the Great Recession are still felt by older millennials. Despite being more educated than previous generations were at the same age, they are earning incomes that are nearly $3,500 less (in 2013 dollars) on average than the same age group did nearly 20 years ago, reported The New York Times.
With lower earnings, millennials are saving less and have net worths that are 43 percent lower than the same age group had in 1995 ($10,400 vs. $18,200, respectively). “Income inequality on top of high cost of living is a huge problem for young adults,” Bonner said.
Generation X Stressed by Healthcare Costs, Tax Increases
Gen Xers (ages 35 to 54) are a sandwich generation, meaning they are most likely to have both children or younger dependents to care for as well as older parents and family members who might also be relying on them. With more people to care for, this group could be hit twice as hard by rising healthcare costs.
Gen Xers’ experience juggling medical expenses and healthcare plans for multiple types of dependents could be why this age group views healthcare costs as the most pressing financial burden affecting the U.S.:
- 31.4 percent of younger Gen Xers (ages 35 to 44) ranked healthcare costs as the No. 1 economic issue, and 39.9 percent of older Gen Xers (45 to 54) ranked healthcare costs No. 1.
- Older Gen Xers, however, are more concerned by tax increases than any other age group, choosing this as their top concern 17.9 percent of the time.
“Individuals in this age group are more than likely making the highest incomes thus far in their lives, which also means being taxed at a higher rate,” Bonner said. A higher tax bracket means a bigger portion of older Gen Xers’ income is eaten up by taxes. “This can make other priorities such as raising their families, affording healthcare and saving to buy a home more difficult,” Bonner added.
Baby Boomers Say Healthcare Costs Are Top Economic Issue
With increased medical needs to pay for, baby boomers (ages 55 to 64) are more likely to see healthcare as both a personal and broader economic issue in the U.S.:
- Baby boomers are the most concerned with healthcare costs of any group, with 40.5 percent selecting this issue as the No. 1 financial burden for the U.S.
- They view higher education as the least significant issue for the U.S. economy, ranking it No. 1 just 4.3 percent of the time.
Seniors Worry About Social Security, Not Taxes or Military Spending
Seniors (age 65 and over) are at retirement age, generally living on fixed incomes and receiving Social Security benefits. Because of these circumstances, they are most likely paying close attention to policies that affect Social Security and would directly impact their finances:
- Seniors selected Social Security benefits as the No. 1 financial concern for the U.S. 40.1 percent of the time, at least twice as much as any other age group.
- Seniors are the age group that views income inequality and tax increases as the least significant financial issues for the U.S. economy.
Specifically, seniors want to see policies that ensure Social Security benefits are well-funded and preserved under current rules. For instance, a recent poll from The Senior Citizens League shows that more seniors support raising the taxable maximum wage cap for Social Security from the current $118,500 limit over other actions like raising the full retirement age.
With many of these Americans getting Social Security benefits and living off of retirement savings, they are outside of traditional income streams and thus would be less impacted by income inequality, which is likely why that is less of a concern for them. Additionally, much of the income from Social Security or capital gains on investments is money not subject to taxes or that is taxed at much lower rates than other income, so seniors often don’t feel the squeeze of tax increases as much as other age groups.
With the benefit of hindsight, seniors might also view Social Security as the No. 1 economic concern for the country because they are experiencing how hard it can be to make ends meet during retirement. In light of how little some younger generations are currently saving for retirement, seniors might be recognizing how critical it will be to preserve Social Security for the next generations of retirees.
Men and Women Share Economic Concerns
Men and women ranked economic concerns in the same order overall, showing that for the most part, their general views about the U.S. economy are aligned. They differed, however, in the degree of significance they assigned to each issue.
Women More Concerned Than Men About Healthcare Costs for U.S.
Women ranked healthcare costs, education costs and Social Security benefits as top economic burdens more often than men did:
- Women ranked healthcare the No. 1 financial burden for the U.S. economy about 30 percent more than men did, at 34.8 percent versus 27.3 percent, respectively.
- Women are also slightly more concerned about how higher education costs and Social Security benefits are affecting the U.S. economy.
Lower pay limits women’s ability to cover medical costs, which are higher for women due to greater healthcare needs and costs throughout their lives. These high costs are a barrier to care, with 40.2 percent of women saying they have medical needs that are left unmet to avoid high costs compared to 29.5 percent of men, according to a 2015 survey by the Urban Institute Health Policy Center.
The gender pay gap also puts women at a disadvantage when dealing with college costs and saving for retirement. With less take-home pay, women are more strained by college or student loan costs and are behind men overall in retirement savings. With fewer resources to address these issues at the individual level, women appear to be more concerned by the nationwide economic impacts of these financial burdens.
Men More Worried Than Women About U.S. Tax Issues
People earning higher incomes are typically affected to a greater degree by tax increases than those earning less because of America’s progressive tax system. “Because men are still making more money than women, it is no surprise that they are more concerned with tax increases,” Bonner said.
Men’s views of the financial burdens on the U.S. economy include the following:
- Men are over 50 percent more likely than women to be concerned by tax increases, at 15.9 percent and 10.5 percent, respectively.
- Men are also more concerned than women about the financial burdens that income inequality and military spending place on the economy.
Political Parties Agree on Healthcare Costs, Diverge on Taxes
Political leanings are tied closely to respondents’ views on key economic issues, found the GOBankingRates Financial Burdens Survey. Although both parties agree that healthcare costs are a top-ranking issue, they disagree about income inequality and taxes.
Democrats Rank Income Inequality, College as Top Economic Burdens
The economic issues most significant to Democratic voters match the platform items the presidential candidates of this party have focused on heavily:
- Respondents who plan to support a Democratic candidate chose income inequality as the most significant financial burden on the U.S. economy, followed by healthcare costs.
- Democrats are 3.7 times as likely as Republicans to be concerned by income inequality and twice as likely to rank higher education costs as a top concern.
Both leading Democratic candidates — Bernie Sanders and Hillary Clinton — have proposed plans to cut college costs and even make attending college free for many students. “I believe that we should make community college free,” Clinton said in a November 2015 Democratic debate. “We should have debt-free college if you go to a public college or university. You should not have to borrow a dime to pay tuition.”
Income inequality has been a central issue for Democratic candidates. Those who earn lower incomes (under $50,000) are more likely to vote Democrat, according to a 2014 Pew Research Center Party Identification survey. These people are more likely to be struggling with cost-of-living concerns and are therefore also more likely to see income inequality as a priority concern for the country.
Republicans Rank Taxes, Healthcare Costs as Biggest Burdens for U.S.
People earning higher incomes are more likely to identify as Republican — and with higher incomes, these voters also land in higher tax brackets and end up owing more to Uncle Sam. Their views on U.S. financial burdens also reflect the concerns of age groups older than millennials:
- Those voting Republican ranked healthcare costs as the top economic issue, followed by tax increases.
- Republicans are about four times as likely as Democrats to say tax increases are a top financial burden on the U.S. economy.
“Leading Republican candidates Ted Cruz and Donald Trump are proposing plans that would mean tax cuts for all income levels, while one of the democratic candidates, Sanders, has a plan to implement increases for all income levels,” Bonner said. She added that it makes sense that those planning to vote Republican would also see taxes as a top economic issue because, “A democratic win could potentially mean higher taxes.”
Although both Democrats and Republicans view high healthcare costs as a main financial burden for the economy, the survey revealed that Republicans are more concerned by this issue. Unlike Democrats, Republicans do not view the Affordable Care Act as a viable solution to healthcare issues in America and have called for the law’s repeal.
The survey’s findings show that Americans are viewing the country’s economic priorities through the lens of their own pressing, personal financial concerns. Across the board, however, healthcare costs are the leading financial burden that all survey respondents cite as the most significant issue affecting the U.S. economy.
Methodology: This survey was conducted by GOBankingRates through Survata and collected 1,007 responses from March 16-17, 2016, with a margin of error of 3.1 percent. It posed two main questions asking Americans about what they considered to be the most significant financial burdens for the U.S. economy and for their personal finances.
The first question asked, “Below are some of the financial burdens for the U.S. economy today. Please rank them from most to least significant.” Respondents were given the following six possible options and were asked to rank them from No. 1 to No. 6, with 1 being the most significant: (1) healthcare costs, (2) Social Security benefits, (3) higher education costs, (4) tax increases, (5) income inequality, and (6) military spending. Answer options were displayed in random order.
The second question asked, “Below are some personal financial concerns. Please rank them according to how challenging they are for you.” Respondents ranked the following six answer options from No. 1 to No. 6, with 1 being the most challenging: (1) high cost of living, (2) healthcare costs, (3) insufficient income, (4) taxes (income, property, and/or other taxes), (5) retirement savings, and (6) higher education costs. Answer options were displayed in random order.
To collect demographic information on respondents, the survey also posed the following questions: (1) “Which political party do you plan to vote for in the 2016 presidential election?”; (2) “What is your total annual household income?”; (3) “What is your estimated total household debt? (total of student loans, credit card, home loans, auto loans, etc.)”; and (4) “What is the total number of people in your household? (including yourself, spouse/partners, children, and other dependents).”
Using responses to these questions and Survata’s data on respondent age and gender, GOBankingRates analyzed responses to produce the findings of its survey.