Wealth Management

Wealth Watch Midyear Outlook

Americans adjust spending strategies to cope with inflation, make progress on debt management

A new report from New York Life reveals household expenses rise $150-$450 per month; cost of housing sees largest increase.

NEW YORK–(BUSINESS WIRE)–New York Life’s latest Wealth Watch survey finds that inflation and credit card debt continue to present challenges for everyday Americans, despite some progress.

Forty-three percent of adults report having credit card debt, consistent with the 42% of adults who reported having credit card debt at the end of 2023. On average, adults with credit card debt owe $6,408.39 and contribute $445.27 per month to pay it off, an improvement from the $7,931.80 owed on average at the end of 2023.

Older generations are more likely to have larger debt balances on average than younger adults, but all generations have succeeded in decreasing their debt since the end of 2023:

  • Gen Z: $1,707.52
  • Millennials: $5,370.06
  • Gen X: $7,530.31
  • Baby Boomers: $7,808.93

“Compared to our New Year Outlook study, Americans are making progress on managing credit card debt, but the economic environment continues to present challenges,” said Donn Froshiesar, Head of Consumer Insights at New York Life. “We can see the toll inflation is taking on Americans’ finances, as they report higher costs of living on everyday expenses and report lower levels of financial confidence. As a result, Americans are adjusting by reducing their spending, especially on “fun” purchases like dining out and buying new clothes.”

Nearly every adult has some financial concern in the current economic environment (90%) with higher costs of living (63%), rising cost of everyday expenses (56%), saving for the future (42%) and having unexpected / emergency expenses (40%) being top concerns.

On average, adults with the following expenses report spending the following each month:

  • Mortgage: $1,809.77
  • Rent: $1,077.33
  • Groceries/Dining out: $523.81
  • Utilities: $397.24
  • Personal education: $867.40

Adults who have seen the following monthly expenses increase compared to a year ago report experiencing the below average monthly increases:

  • Mortgage: $451.15
  • Personal education: $410.99
  • Rent: $302.94
  • Groceries/Dining out: $209.45
  • Utilities: $161.45

Likely to account for increases, many adults have adjusted their budget. In the past 6 months, over 4-in-10 adults have cut back at least somewhat on dining out (47%), apparel/shoes (43%) and entertainment (41%) to maintain their monthly budget.

Many adults expect prices to continue increasing with 42% of adults expecting their living expenses to be higher in the second half of 2024 than they are now.

  • When asked to estimate the largest expenses for the second half of the year, groceries/restaurants (57%), paying monthly bills (54%) and rent/mortgage payments (42%) rise to the top.

Many adults are using their credit card to pay for essential costs with the leading expenses charged being groceries (61%), gas (53%), utilities (48%) and housing (35%).

Americans Are Focused On Bolstering Savings And Strategizing For Retirement, But Need Guidance To Execute Against Their Goals

Adults are feeling slightly less confident about reaching their financial goals now than at the end of last year: 64% were feeling confident, versus 58% now.

38% of adults report having an emergency fund. On average, adults with an emergency fund have $29,741.87 set aside.

  • Gen Z: $16,479.24
  • Millennials: $29,035.57
  • Gen X: $31,040.07
  • Baby Boomers: $34,033.34

Three-fourths of adults with savings (76%) report they dip into them with the top reasons including covering unexpected / emergency expenses (43%), paying for essential costs (e.g., utilities, groceries, housing) (41%) and paying off debt (26%).

American adults are prioritizing financial goals in 2024 focused on improving their financial situation, such as building an emergency fund (34%), working toward becoming debt free (32%), contributing to retirement savings (31%) and improving their credit score (30%).

  • However, almost half of adults with these financial goals have either not started or have made little progress towards these top goals of building emergency funds (47%), working toward becoming debt free (46%), contributing to retirement savings (40%) and improving their credit score (44%).

When asked about retirement planning, nearly half of adults (52%) don’t have any form of strategy in place (e.g., retirement savings, a will, retirement strategy, estate plan, etc.) and only a third of adults (31%) report having retirement savings.

  • Most Baby Boomers and Gen Xers (86% and 55% respectively) expect social security to be a source of income in retirement, but Millennials and Gen Zers are less certain (38% and 27% respectively).
  • The good news is that Baby Boomers are more likely to have plans in place for retirement than other generations (Gen Z: 43%, Millennials: 47%, Gen X: 47%, Baby Boomers: 62%).
We’re pleased to see Americans focusing on financial goals in 2024 that will help them build a strong financial foundation, while working toward long-term financial wellness...

Half of Baby Boomers report they know how much money they need for retirement (50%) and have a strategy for long-term care costs (46%), yet only a third of Baby Boomers (32%) know they will not outlive their assets.

  • Despite low levels of retirement savings, adults that do have retirement savings are confident their savings will last the rest of their life (68%).

“We’re pleased to see Americans focusing on financial goals in 2024 that will help them build a strong financial foundation, while working toward long-term financial wellness,” said Froshiesar. “The economic environment remains challenging for many, but recent U.S. Consumer Price Index data has shown inflation is cooling, a hopeful sign for the broader economy and consumers alike. Even as the challenging macro-environment persists, there is a lot that people can do to improve their financial situation. This points to the critical importance of having a financial strategy in place, no matter what stage of your life and financial journey you are in. People with a strategy are more likely not only to feel confident about reaching their goals, but to actually reach them, regardless of the macro-economic factors at play. It’s never too late to get started.”

Financial Outlook For Families Is Impacted By Rising Cost Of Childcare, But Parents Still Prioritize Saving For The Future

When asked to explain what being wealthy means to them, parents report the most important contributor to “feeling wealthy” is spending time with loved ones (66%).

On average, parents report spending $718.55 on their child’s education and $610.68 on childcare / daycare each month.

  • 42% of parents with child education costs and 40% of parents with childcare / daycare costs report that their monthly bills have increased compared to a year ago.
  • Parents that say their monthly bills have increased in these areas over the past year report the below monthly increases compared to a year ago:
  • Child’s education: $412.66
  • Childcare / daycare: $279.25

3-in-10 parents report using their credit card to pay for their children’s education (33%) and childcare (31%) each month.

  • Half of parents report having credit card debt, more than the general population (50% vs. 43% respectively).
  • Parents with credit card debt report owing $6,257.51 in debt on average.

While caregiving costs are on the rise, some parents are still able to save for the unexpected – with 39% of parents currently having an emergency fund and 41% saying they plan to start one in the future.

  • Parents with an emergency fund report having $36,855.16 stashed away on average.
  • Parents report currently having $11,285.78 set aside for their child(ren)’s future education fund.

Parents report owning financial protection products like life insurance, long-term care insurance, or annuities at higher rates than non-parents (60% vs 46%, respectively); 45% of parents report having life insurance compared to 33% of non-parents.

“Financial wellness—what it means, what it looks like—changes throughout life. Notably, parents prioritize spending time with loved ones above all else when defining wealth, and place greater importance on owning a home, having flexibility for childcare, and owning sufficient life insurance,” said Froshiesar. “For parents seeking to prioritize financial wellness for themselves and their children, it’s more important than ever to nail the financial basics before tackling long-term financial goals, ensuring a strong foundation for long-term financial health for both themselves and their children.”

 

 

 

About Wealth Watch
Wealth Watch is a recurring survey from New York Life that tracks Americans’ financial goals, progress toward those goals and feelings about their ability to secure their financial futures, identifying key themes and trends that are emerging about topics like retirement planning, the role of protection-oriented solutions and the importance of financial guidance.
Survey Methodology
This poll was conducted between May 24 – 26, 2024 among a sample of 2,202 Adults. The interviews were conducted online and the data were weighted to approximate a target sample of adults based on gender, age, race, educational attainment, and region. Results from the full survey have a margin of error of plus or minus 2 percentage points.
About New York Life
New York Life Insurance Company (www.newyorklife.com), a Fortune 100 company founded in 1845, is the largest mutual life insurance company1 in the United States and one of the largest life insurers in the world. Headquartered in New York City, New York Life’s family of companies offers life insurance, disability income insurance, retirement income, investments, and long-term care insurance. New York Life has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies.2
1 Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/4/24. For methodology, see https://fortune.com/franchise-list-page/fortune-500-methodology-2024/
2 Individual independent rating agency commentary as of 11/17/2023: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).

 

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