A new study quantifies what most of us already know: More Americans are in financial trouble now, than in a very long time.
At least 25 years according to Yale University political scientist Jacob Hacker, who lead the research team whose work was paid for by the Rockefeller Foundation.
The study concluded that families became financially insecure when two things happen:
- The experience a major loss of income (25% or more) or big, out-of-pocket medical expenses, and…
- They don’t have enough money saved to replace those losses.
Comparing financial data going back to 1985, it found that 12.2% of Americans experienced a major economic loss during that year that would classify them as financially insecure.
In 2002, following the recession of 2000 and 2001, 17% of us were financially insecure.
In the aftermath of the far more serious recession of 2008 and 2009, the study expects that more than 20%, or one in five Americans, are facing a financial crisis.
That certainly helps to explain why so many people are so angry at Washington.
It seems the federal government had plenty of money to save the banking industry from all of its reckless lending, but precious little to help families who paid dearly for the recession the banks caused.
But over the last 25 years too many Americans failed to appreciate what the study clearly shows – insufficient savings is a critical contributiong factor to almost every individual financial crisis.
I admire every single person who took the responsibility, and made the sacrifices necessary, to save for an uncertain future.
I applaud every single family that endured a long layoff without falling into the category of “financially insecure” because of their decision to hope for the best but plan for the worst.
You’re the heroes of this financial crisis because you didn’t allow yourselves to become its victims.