Updated April 22, 2026 at 5:07 PM EDT
Less than half of Americans have $1,000 saved up in case of an emergency, according to an annual report from Bankrate.
That’s because saving for retirement and emergencies, while juggling the rising costs of the basics, can be tough in this economy.
“If you don’t make enough money, you don’t save enough,” said labor economist Kathryn Anne Edwards. “And although we have a very well-intentioned personal finance and financial advice industry, there’s not much advice you can give to someone who is at a severe disadvantage when it comes to affording their own life.”
Edwards suggested the government could do more to create a nation of savers.
6 questions with Kathryn Anne Edwards
There are some retail surveys out that suggest more people plan to use their tax refunds this year to pay off bills and debt, rather than save. Does that line up with what you’re seeing?
“It lines up perfectly with what we’ve seen from the labor market and from credit markets. The U.S. labor market has had a low unemployment rate, but has been in steady decline for about four years. We’re not seeing as many people quit. We’re not seeing as many people get hired. And we’re not seeing high wage growth.
“So how do you afford a more expensive life when your wages aren’t rising that quickly? You borrow. And so, in tandem, we have seen an explosion in consumer credit, consumer debt, and even over the past, say, nine months, a steady increase in the number of 90-day delinquencies on that rolling debt.
“Now, it’s not like the 2000s when a lot of the explosion in debt was coming from [the] housing market. You saw mortgage debt and home equity lines of credit take off. Today’s debt is much more in the consumer credit market. So, auto loans, credit card loans and other unsecured loans.”
How much of this savings barrier that you’re talking about is related to inflation?
“It’s hard to tell. I think inflation is that much more salient. You know, we see the price tag. We see the amount on the bill, we see the amount on the receipt, and we have sticker shock from it.
“But the real driver of affordability and the lack of affordability in the U.S. has been an underperforming labor market that [has] had five decades of issues when it comes to just remunerated wages for the U.S. worker. But it’s harder to see the wage side, right?
“You can see that you know, you have a bill that went up. And there’s a lot of psychology behind numbers and emotions behind numbers of, ‘This is how much I had in my head something cost – and now it’s more.’ We don’t really necessarily see the whole board of wage stagnation played out over several decades for the U.S. worker.”
But Americans also love to buy stuff. Isn’t consumer spending the biggest driver of the U.S. economy?
“Yes, but that’s not because of some kind of personal fault of American households that we’re just so spendy and we don’t like saving. Part of it is that we need to just afford and buy our lives.
“Part of it is that a post-industrialized economy tends to move towards consumption and away from production. And of course, we don’t necessarily have the infrastructure in place to encourage saving. A lot of the things that we’d like to blame an individual on, to say, ‘You’re not great at savings’… Saving is manipulable by public policy. And we have really good evidence that we can get Americans to save, it’s just we withhold it from a lot of people.”
What’s an example of how the government could help people save?
“Well, you probably read about how there’s a record number of millionaires in the United States. We have roughly 22 million people who have over $1 million dollars in net wealth. Those people don’t make better decisions than the rest of us, who are all suckers. A lot of them are defaulted into 401(k) savings plans from their employer.
“We’ve learned, since 401(k)s started to replace defined benefit plans in the early 1990s, when you lost pensions and gained an investment account, you know, people didn’t sign up for them. And throughout the 90s, you saw participation rates in the low 30s, mid-30s. So, then they started to do experiments that say instead of having people sign up, figure out what they’re going to invest in and figure out how much they’re going to invest, what percentage of their paycheck. Why don’t we just put everybody in an account, put everybody in a plan, sign them up for some default status and see how many people decide to leave? And participation rates, for one case, went from the 30s to the high 80s. It was a more than 50-point jump in the people who saved when they were defaulted into a plan.
“Twenty years later, we enshrined in Secure 2.0, that if you get a retirement plan from your employer, they legally have to enroll you in the plan and have to escalate your contributions as you age. We are saving on your behalf, and we are really, really good at it. But we only offer it to workers whose employers have decided that they are worth a 401(k) – and not everybody else.”
Housing prices are also way, way up. So, if you own a home, that might be another reason why you’re a millionaire on paper, but you might not necessarily feel that rich, right?
“Yes. And the home prices over the past 25 years have been through a roller coaster. A lot of people say the housing market has been one of the more difficult aspects of their life in terms of affordability.
“But I think we quickly jump from broad macroeconomic problems like a housing market that was unregulated, that led to a foreclosure crisis, to individual decisions of whether or not to save. Individual decisions of whether or not they can afford that down payment for a house. When, at the same time, you could set up a savings account for a home when you’re born. [Former President Barack] Obama tried to do it. It was called the myRA [my Retirement Account]. [President] Trump is trying to do it. It’s called the Trump accounts. We could set up an automatic retirement account for every single worker in the U.S., whether or not their employer wants one or not.
“These don’t have to be withheld from Americans or gatekept by their employers. There’s lots of great policies to turn America to a country of savers. We have them. We know they’re successful. We do not implement them.”
Any advice for people?
“I don’t think I have good advice. I think there’s so much judgment in the personal finance space and personal decision-making of you. ‘Did you do this? Did you save this? Did you have this?’ What we have learned from research and studies of American households is that they are incredibly resourceful and strategic in trying to make ends meet. I wish they didn’t have to be so.”
This interview was edited for clarity.
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Ashley Locke produced and edited this interview for broadcast with Micaela Rodríguez. Locke also produced it for the web.
This article was originally published on WBUR.org.
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