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Bankruptcy Watch: American Savings Accounts Still Abysmal

Blogs from March, 2013

Lawyer taking notes

About half of Americans aren’t saving enough money to help cushion the blow of an emergency – let alone to make sure they’ll have a comfortable retirement.

Man laying head on his arm

Woodland Hills bankruptcy lawyers know this is according to a recent survey conducted by the American Savings Education Council and the Consumer Federation of America.

We’re talking about a massive number of people nearing retirement who aren’t going to have enough to cover even the most basic needs. We’re not talking cutting out the cruise ship vacations – we’re talking an inability to cover health care costs‚ housing costs and things like food and gas.

These individuals would do well to consider filing for bankruptcy now‚ while there is still time to work on rebuilding savings accounts and credit scores. Yes‚ your score is going to take a hit in the short-term‚ but otherwise‚ you may risk significantly delaying your retirement or being reduced to a standard of living that is below the poverty level.

What you can’t do is rely on Social Security payments. A monthly statistical snapshot provided by the Social Security Administration reported that the average benefit paid out to over-65 recipients was less than $1‚200 a month. It’s barely enough for many people to even cover housing.

Researchers reported that the recession is having a lingering effect on many households. However‚ people need to take a close look at where these spending and saving habits are going to leave them in the next two to three decades.

Nearly 40 percent of respondents said they were saving less this year than the year before. About the same amount said they were trying to save with automatic transfers from checking or through investments. Only about 65 percent said they had any amount saved up to cover emergency expenses like a medical crisis or a vehicle breakdown.

A little more than half said they had saved up more for emergencies than what they currently owed in credit card debt.

Paying down credit card debt is essential to being in a position to put aside some for retirement.

Unsurprisingly‚ income was a major precursor in determining whether a person had enough to build their savings. Among those who earned $75‚000 or more‚ about 70 percent had more savings than debt‚ compared to about 40 percent of those who earned $30‚000 or less. Of course‚ the recession has had a negative impact on both employment rates and salaries.

Fewer than half of all low-to-moderate income earners had any savings at all.

A federal proposal to raise minimum wages from $7.25 an hour to $9 an hour could help‚ but it may be years before we see any real benefits from that‚ and even then‚ the results could be incremental.

America Saves Week‚ which runs from late February through early March‚ is being marked by thousands of financial institutions and non-profits encouraging workers to bolster their savings by setting up automatic transfers to a savings account and increasing their contributions to 401(k) accounts.

Those who find themselves in over their heads with debt should contact a bankruptcy attorney as soon as possible to discuss options.

If you are contemplating Chapter 7 bankruptcy in Woodland Hills‚ contact Cal West Law to schedule your free consultation. Call (818) 446-1334

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