Financial Anxiety is Prevalent Among Americans, Even Affluents

GALLUP NEWS SERVICE

PRINCETON, NJ -- Whether or not money buys happiness is widely debated, but whether or not money buys financial peace of mind would seem to be a more straightforward matter. Not so according to Gallup's annual Personal Finance poll, updated Apr. 2-5, 2007, in which Americans were asked to rate the amount of concern they have about each of several financial problems. To be sure, people's degree of financial anxiety is directly related to their household income. However, an index of seven of the financial items updated this year shows that almost two-thirds of those who are in Gallup's top-income category still worry about at least one of the issues examined in the poll.

A majority of respondents in each of the top two income brackets studied express concern about no more than two financial worries. This pattern shifts among those in the $30,000-to-$49,999 income bracket, where the majority of respondents have three or more worries. The percentage with three or more worries jumps substantially, to 74%, among those in the lowest income bracket.

Retirement is Top Concern

Of the eight specific items rated in this year's poll, "not having enough money for retirement" generates the most concern. Even a majority of Americans in upper-income households say they are very or moderately worried about their retirement income. The prospect of paying for medical costs in the case of a serious illness or accident also ranks high among the public. Of slightly lesser concern, but still a worry for at least one-third of Americans, are paying medical costs for normal healthcare, covering a child's college expenses, and being able to pay one's normal monthly bills. Less worrisome are being able to pay housing costs such as rent or mortgage, or making the minimum monthly payment on credit cards.

Gallup has tracked public anxiety about all but one of these financial issues (paying for college) each year since 2001. Across that period, concern levels have been fairly steady, except for last year when concern was a bit higher for meeting monthly bills, maintaining ones standard of living, and covering medical expenses for a serious illness or injury. This year, concern for these items reverted back to levels more typical of previous years.

Concern about paying college expenses -- new to the list this year -- is fairly modest among the general pubic: just 34% of all Americans say they are very or moderately worried about this. However, for adults with children under age 18, it essentially ties with saving for retirement as their top concern. There are no significant differences between parents and non-parents on any other financial issues.

One's stage of life is also a factor in terms of other financial worries.

• Middle-aged Americans (those 35- to 64-years-old) shoulder the most anxiety when it comes to saving for retirement, paying medical bills, and maintaining their standard of living.
• With nearly half of young adults reporting they have a child under 18, and more than one-third of middle-aged adults in the same position, it is not surprising that these two groups are the most concerned about meeting college expenses.
• Young adults are also the most concerned about making the minimum payments on their credit cards.
• Although paying rent, mortgage, or other housing expenses is a relatively low concern for all groups, it is more common among 18- to 34-year-olds and 35- to 64-year-olds than with those 65 and older.
• Middle-aged adults -- who tend to have greater health problems than younger Americans and, unlike seniors, are not yet covered by Medicare -- are the most concerned about paying medical expenses.

 In fact, seniors are uniformly the least worried of any age group on all of these issues.

Does Money Buy Peace of Mind?

Naturally, one's financial means strongly influence his or her degree of personal worry about money issues. Those in upper-income households can afford to worry a lot less than others about most of the items measured.

Compared with high-income Americans, low-income Americans worry a lot more about paying their normal monthly bills (58% vs. 15%), meeting their housing costs (46% vs. 9%), and making minimum payments on credit cards (32% vs. 6%). These are the areas that set upper- and lower-income Americans most apart financially.

Adults living in low-income households are also about twice as likely as those living in high income households to worry about maintaining their standard of living (59% vs. 28%) and paying normal healthcare costs (50% vs. 21%).

However, money does not present an absolute barrier to widespread financial anxiety, particularly when it comes to retirement, paying for a serious illness or accident, or meeting college expenses. About half of upper-income Americans worry about having enough money in retirement, while nearly 4 in 10 worry about paying bills for a serious illness. The two income level groups express the same degree of worry about meeting college expenses.

Retirement Worries Start Young

Americans are reported to have a negative savings rate (they spend more than they earn) and most aren't saving nearly enough for their retirement. However, this is not to say Americans aren't concerned about their retirement savings, even at a young age. Using a combined dataset from the 2005, 2006, and 2007 Gallup Personal Finance surveys, the following table indicates the percentages of various age groups saying they are very or moderately worried about having enough money for retirement.

While fewer than half of the youngest adults -- 18- to 24-year-olds -- are generally concerned about retirement savings (44% say they are very or moderately worried), this quickly changes. A majority of those in their upper 20s are concerned, not much different than those in their 30s.

Anxiety about retirement savings appears to taper off in the early 60s, however not until retirement age (65 years old) does the percentage of respondents saying they are very or moderately worried again fall below 50%.

Survey Methods

Results are based on telephone interviews with 1,008 national adults, aged 18 and older, conducted Apr. 2-5, 2007. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 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.

23. Next, please tell me how concerned you are right now about each of the following financial matters, based on your current financial situation -- are you very worried, moderately worried, not too worried, or not worried at all. If a particular item does not apply to you, please say so. First, how worried are you about … How about -- [ITEMS A-G ROTATED, ITEM H READ LAST]?

A. Not being able to pay medical costs for normal healthcare

B. Not being able to pay medical costs in the event of a serious illness or accident

C. Not being able to pay your rent, mortgage or other housing costs

D. Not being able to maintain the standard of living you enjoy

E. Not being able to make the minimum payments on your credit cards

F. Not having enough money for retirement

G. Not having enough to pay your normal monthly bills

H. Not having enough money to pay for your children's college