Is the American Dream still attainable? A recent survey by CUNA Mutual Group found middle-class Americans still feel relatively optimistic, but some of the study’s findings contradict that rosy outlook.
CUNA Mutual found members of the middle class tend to feel positive about their prospects for upward mobility. When asked to grade the ability of the middle class to achieve the American Dream, the average response was a B-.
The survey, conducted in August, polled more than 1,250 U.S. adults with incomes from $35,000 to $100,000. The findings were released Tuesday.
Many respondents had a positive assessment of their financial security: 62 percent said they feel “somewhat confident” or “very confident” about their personal financial situation, and nearly half (46 percent) said they believe it is “very unlikely” they will miss a loan payment over the next one to two years.
However, there were some practical findings that cast doubt on these consumers’ confidence. For example, more than half of respondents reported they are ill-equipped for an emergency, with 23 percent saying they have no emergency savings and 30 percent saying they only have one month to three months’ worth of reserves.
“The middle class continues to experience stress from the long-term impacts of the 2008 recession,” Steve Rick, chief economist at CUNA Mutual Group, said in a statement. “Markets may be rebounding and unemployment at historic lows, but we are still seeing middle class families struggle with sticky wages, inadequate liquidity, high debt, insufficient savings and difficulty building wealth.
“This population is among the most exposed to an eventual downturn,” Rick added.
Retirement remains a vulnerable spot
Few survey respondents said they feel prepared for retirement, with only 28 percent reporting they will be able to retire with financial confidence in their lifetime. Many seem to be more focused on short-term goals considered hallmarks of the American Dream: 38 percent said they feel they will be able to buy a new car in their lifetime, and 37 percent say they will be able to travel internationally.
A lack of financial literacy education and support may be driving this lack of long-term preparedness, CUNA Mutual Group asserted. According to separate survey of retirement plan participants the company conducted earlier this year, understanding available tools and resources and learning how to budget and manage debt are key areas where employees seek more information to better achieve their retirement goals.
CUNA Mutual found sentiments among participants generally remained consistent across age, ethnicity, gender and other demographics. However, millennials showed “significant divergence” from overall trends when it came to many of the traditional components of the American Dream:
• 49 percent have put off buying a home, compared to 29 percent of the general population
• 31 percent have put off higher education, compared to 17 percent overall
• 23 percent have put off starting a family, compared to 9 percent overall
Delaying some of these key life milestones may be contributing to a better sense of financial well-being, including their prospects for retirement, Rick said. CUNA Mutual noted nearly two-thirds of respondents said they feel “very confident” or “somewhat confident” about their current financial situation, and 33 percent believe they will be able to retire comfortably. The gap between financial security and emergency savings, however, once again reveals a disconnect: 62 percent say they have three months or less of savings.
“A vibrant middle class is essential to a healthy, functioning economy and nation,” Rick said. “But we are seeing a troubling picture emerge as their ability to manage their finances in the near term is coming at the expense of the long term. No one can control the economic winds, but the financial industry can provide the resources the middle class needs to break out of the cycle of economic insecurity.”
