Americas

Financially Speaking, What's Troubling Americans?

Nothing dominates, but economic uncertainty and retirement savings register high

GALLUP NEWS SERVICE

PRINCETON, NJ -- In the consumer-driven U.S. economy, Americans' state of mind about their financial wellbeing matters. A consumer who is flush with income or who feels secure about his or her ability to keep up with debt payments is a consumer who will likely continue shopping and, in turn, help present a barrier to economic recession. This is crucial at a time when the bubble in the housing market appears to be stretching. If it breaks, and housing values crash, so does Americans' primary asset, and, in some cases, their only affordable line of credit. By lowering interest rates earlier this month, and thus loosening up the mortgage market, the Fed clearly wants to avert that disaster.

It is within this context that Gallup's latest questions about financial worries are important. Are Americans anxious about the possibility that their mortgage payments could balloon, or that their incomes will no longer support all of their loan and debt obligations?

As part of Gallup's Sept. 24-27 Panel survey -- a nationally representative survey of 1,006 Americans -- respondents were asked two questions:

What, if anything, worries you most about your personal financial situation in the short term , that is, over the next year or so?

Thinking further ahead into the future, what, if anything, worries you most about your personal financial situation in the long term ?

Americans have little top-of-mind concern about paying their mortgages (or rent), or making their credit card payments. No more than 3% of Americans name any of these specific issues as either short-term or long-term financial concerns. Eleven percent of Americans do say, broadly, that not having enough money to meet all of their expenses is what worries them most right now, as do 7% when thinking about the long-term future. However, all told, explicit mentions of paying down debt or meeting expenses represent a modest fraction of all the financial issues mentioned.

Short term

Long term

%

%

Debt (nonspecific)

3

2

Credit card debt

1

--

Paying mortgage/rent

2

--

Income is not enough to meet expenses

11

7

Concerns about job security are closely related to income anxiety. This emerges as a relatively modest worry as well. A total of 9% are concerned about finding jobs or losing their jobs today or in the near future, while 6% express this fear about the long term.

Short term

Long term

%

%

Job security concerns/
Possible loss of job

7

3

Currently unemployed/
Trying to find job

2

3

The largest category of responses is macroeconomic in nature -- consisting of things largely outside of individual Americans' control. Chief among these are healthcare and health insurance costs, which 9% of Americans name as a current concern, and 13% as a long-term concern. But taken together, sizable numbers also mention inflation, housing costs, the possibility of a downturn in the stock market, taxes, the possibility of recession, rising interest rates, gas and home heating prices, and long-term care.

Short term

Long term

%

%

Health insurance/Cost of healthcare/Having healthcare

9

13

Rising cost of living/Inflation

6

7

Housing costs

4

4

Stock market downturn/crash/investments

3

4

Taxes

3

3

Recession

2

3

Interest rates

2

--

Gas prices

2

--

Energy/Home heating prices

1

--

Long-term care/Nursing home

--

2

College expenses are a category unto themselves, mentioned by 4% of Americans as their primary short-term financial worry, and by 6% as their primary long-term worry.

Little Distinction Between Now and the Future

Americans are slightly more likely to be worried about healthcare as a long-term rather than a short-term concern, and about meeting their expenses and keeping their jobs as short-term concerns. But otherwise, Americans' short- and long-term worries are similar.

The one notable exception is saving for retirement. This is mentioned by 18% of Americans as their top long-term financial worry, while it doesn't register as a short-term top-of-mind concern. An additional 8% worry about receiving their Social Security benefits in the future, making this a substantial area of concern for the long term. But with only 3% citing Social Security benefits as something they worry about now, retirement income is a minimal short-term concern.

Short term

Long term

%

%

Retirement savings/
Retirement income

--

18

Social Security benefits

3

8

The single most common answer to what Americans worry about, financially, is "nothing," particularly concerning the short term. Thirty percent of Americans say that nothing worries them about their short-term finances, and an additional 3% can't think of anything. About half this level say they have no long-term financial worries.

Short term

Long term

%

%

Nothing

30

15

No answer/Not sure

3

3

The Wealthy Worry Too

In terms of who worries about what, some of the more notable distinctions among Americans fall along income and generational lines. Interestingly, despite having greater financial means, higher-income Americans (those living in households earning $75,000 or more per year) are no less likely than those in lower-income households to be free of long- or short-term financial worries; they just worry about somewhat different things.

  • Americans living in households earning less than $35,000 per year are about twice as likely as those in households earning $75,000 or more to name "not having enough income to meet expenses" as their primary short-term worry: 18% vs. 8%.
  • Those living in higher-income households are more likely than those in lower-income households to say that in the short term they worry about housing costs (5% vs. 2%) and college expenses (6% vs. 1%).
  • Younger adults (those under 50) are more likely than those 50 and older to worry about their incomes, job security, and college expenses in the short term, and retirement and college expenses in the long term. Older Americans are more likely to worry about healthcare expenses in both the short term and long term.

Bottom Line

While some economists worry that Americans are saving too little and spending too much, the financial worries of Americans themselves are directed much more toward the broader economy.

This is understandable given the low level of consumer confidence right now. Gallup's Sept. 14-16 national survey found 69% of Americans describing current economic conditions as "only fair" or "poor," and 71% believing they are getting worse. Those figures are among the worst readings of consumer confidence Gallup has recorded in the past seven years.

Survey Methods

Results for this panel study are based on telephone interviews with 1,006 national adults, aged 18 and older, conducted Sept. 24-27, 2007. Respondents were randomly drawn from Gallup's nationally representative household panel, which was originally recruited through random selection methods. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

Next, we'd like to ask you about concerns you have about your personal financial situation both in the short term and long term.

8. First, what, if anything, worries you most about your personal financial situation in the short term , that is, over the next year or so? [OPEN-ENDED]

2007 Sep 24-27

%

Income is not enough to meet expenses

11

Health insurance/cost of healthcare

9

Job security concerns/possible loss of job

7

Rising cost of living/inflation

6

Housing costs

4

College expenses

4

Taxes

3

Debt (non-specific)

3

Social Security benefits

3

Stock market downturn/crash

3

Currently unemployed/trying to find job

2

Recession

2

Paying mortgage/rent

2

Gas prices

2

Interest rates

2

Energy/home heating prices

1

Credit card debt

1

 

Other

9

Nothing

30

Everything

*

No answer/not sure

3

* Less than 0.5%

Percentages add to more than 100% due to multiple responses.

9. Now thinking further ahead into the future, what, if anything, worries you most about your personal financial situation in the long term ? [OPEN-ENDED]

2007 Sep 24-27

%

Retirement savings/retirement income

18

Healthcare costs/having healthcare

13

Social Security/changes to Social Security

8

Having enough money to meet expenses

7

Inflation/rising cost of living

7

College expenses

6

Housing costs

4

Stock market/investments

4

Taxes

3

Finding a job

3

Job security

3

Recession

3

Long-term care/nursing home

2

Debt

2

 

Other

9

Nothing

15

No answer/not sure

3

Percentages add to more than 100% due to multiple responses.

Gallup http://www.gallup.com/poll/101674/Financially-Speaking-Whats-Troubling-Americans.aspx Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A +1 202.715.3030