Board of Governors of the Federal Reserve System

Americans' overall financial well-being in 2016 continued on a modest upward path, although the improvement was less pronounced for those with less education, according to the Federal Reserve Board's latest Report on the Economic Well-Being of U.S. Households.

The report, based on the Board's fourth annual Survey of Household Economics and Decisionmaking conducted in October 2016, presents a picture of improving financial well-being among Americans. Overall, 70 percent of respondents said they were either "living comfortably" or "doing okay," up 1 percentage point from 2015 and up 8 percentage points from the first survey results in 2013. The improvements in well-being as reported by the survey respondents are concentrated among adults with at least some college education.

"The survey findings remind us that many American households are struggling financially, including fully 40 percent of those with a high school diploma or less," said Federal Reserve Board Governor Lael Brainard. "More broadly, 44 percent of all respondents could not cover an unexpected $400 emergency expense or would rely on borrowing or selling something to do so. The survey also shows that many adults have no savings for retirement."

The survey results also highlight differences in how those who went to college perceive the value of their education. Respondents who failed to complete at least an associate degree were less likely to report that the financial benefits exceeded the cost than were those who completed a degree. Although majorities of degree completers from a wide range of majors indicated that the financial benefits of their education exceed the costs, respondents with a degree in engineering were the most likely to report that their education was financially worthwhile. And perceived value also varied among those who attended public, non-profit, or for-profit institutions.

The survey covers several aspects of financial instability. Twenty-three percent of adults did not expect to be able to pay all of their current month's bills in full; 25 percent reported skipping medical treatments due to cost in the prior year; and, if faced with an unexpected $400 emergency expense, 44 percent of adults either could not pay the expense or would borrow or sell something to do so. This share of adults who appeared ill-prepared for a $400 emergency has declined 6 percentage points since 2013, and the share who reported missing medical treatments due to an inability to pay has declined 7 percentage points since 2013.

An additional concern among some workers was the scheduling requirements of their employer. Seventeen percent of workers, including 24 percent of those with a high-school education or less, report that their schedule varies from week to week based on employers' needs. Of those with variable schedules, two-thirds receive their schedule six days in advance or less, and 37 percent either have on-call scheduling or receive notice one day or less in advance.

In addition to the short-run challenges that some adults experience, a continued challenge that is also highlighted in the findings is a difficulty planning for the long-term needs in retirement. This includes the 28 percent of non-retired adults who lack retirement savings, and--among those who are saving--a lack of comfort in managing these savings. Fifty-three percent of adults with self-directed retirement accounts were either "not comfortable" or only "slightly comfortable" in their ability to make the right investment decisions about those accounts. Forty percent of black retirees and 50 percent of Hispanic retirees indicate that poor health contributed to their decision about when to retire, compared to 26 percent of non-Hispanic white retirees for whom health was a deciding factor.

Previous surveys have informed the Federal Reserve and other government agencies about consumer financial behavior and opinions. More than 6,600 respondents completed the survey. Topics covered in the survey and the report include individuals' overall financial well-being, employment experiences, income and savings behaviors, economic preparedness, access to banking and credit, housing and living arrangement decisions, education and human capital, student loans, and retirement planning.

The report and a video summarizing the survey's findings may be found at: https://www.federalreserve.gov/consumerscommunities/shed.htm.

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