For America’s middle-income families, the dollars aren’t making sense
With improved financial know-how, sleepless nights can give way to a more restful future
Sixteen years ago, Katie and Bruce Stone chose happiness over money.
Bruce’s well-compensated but highstress job at a San Diego company that investigates architectural defects often took him away from Katie and their three children, all under age six at the time.
“That just wasn’t what we wanted for our lives,” Katie says.
Since then, Bruce, 50, has worked as an independent inspector for homeowner associations, and Katie, 47, manages a small division of an accounting firm. Shifting gears gave them more time together, she says, but they’ve felt financial repercussions. Their credit card debt has been compounded by rising interest rates. In recent years, health insurance costs, emergency medical bills and college expenses have racked up.
When big financial decisions come up, Katie says, “I’m not 100% confident I know the right answer.”
The Stones’ financial anxieties are shared by many middle-income Americans. Yes, the economy by many measures is booming: GDP is growing steadily, unemployment remains low and the opportunity for economic growth in 2019 is promising. And yet, Primerica — a leading provider of financial services to middle-income families — found in a recent survey that many Americans struggle to meet their financial goals. The 2019 Primerica Financial Security Monitor surveyed 1,000 American households making between $29,000 and $106,000 a year and found many of them have difficulty saving and making sound decisions. They feel unprepared to plan for a secure future, yet only half have met with a financial professional who could help them chart a course toward financial security.
“Many people know how to take care of short-term financial goals — how to pay bills on time and take care of their families. But they don’t have the financial knowledge or roadmap to plan for the future,” says Rene Lampley Turner, a Primerica licensed representative and senior vice president.
FINANCIAL FEARS
The Primerica survey pinpoints what middle-income Americans worry about most, and what money matters they fall short on:
Two-thirds are not confident they can achieve major goals like saving for retirement, paying for life insurance or covering emergency expenses. More than eight in 10 don’t think they can make student debt payments. About seven in 10 are worried about how their families would cope financially with a major medical expense. Nearly two-thirds have made at least one really bad financial mistake, with an average loss of more than $27,000.
Not saving enough for retirement is a particularly salient concern. Middleincome Americans are more afraid of not saving for retirement than they are of dying, public speaking or losing their homes. Yet only a third save for retirement every month.
Contributing to her 401(k) is the only way Daisy Hicks, 36, is saving these days. Even so, the mother of two says, “I don’t have space in my mind to think about something like retirement right now.”
Hicks is a workforce counselor at a Washington, D.C. charter school. She also works part-time for a nonprofit organization that prepares teens for jobs in event management. She and her electrician fiancé Dion Favoy, 45, weren’t prepared financially when recently they had to move because their apartment flooded. Then both their cars broke down and hers was repossessed. It all required money they hadn’t planned to spend.
DEFINITION OF SUCCESS
Though middle-income Americans are anxious about their financial futures, being able to use their money wisely is central to how they define a good life. More think owning a home and saving for retirement are essential to success than having a good job or owning a luxury car.
Rose Salyards Sopocy, 22, a funeral director in Racine, Wisconsin, has been saving since she was a child, when her mother put every dollar Rose got for birthdays, Christmases and graduations straight into the bank.
“All of that really added up,” Sopocy says.
She went to community college and finished her bachelor’s online. She and her husband Brett, 26, a car salesman, moved to Wisconsin from the Chicago area last year for the lower cost of living. Today, she has “not a single cent of debt,” and she and Brett own their home, at a time when many of their Millennial peers are delaying home ownership.
GETTING HELP
Sopocy has worked with a financial representative for three years, but about half of middle-income Americans in the Primerica survey say they do not have access to a financial professional with whom they feel comfortable. Three-quarters are not very confident they could determine how much to save for retirement without a financial professional’s input. About six in 10 are not very confident about tracking their financial progress or buying insurance.
Getting help is “key to finances,” says Brad Klontz, associate professor of financial psychology and behavioral finance at Creighton University in Omaha, Nebraska. “I know you’ve got pliers in the garage, but you should outsource your dentistry.”
Primerica representative Turner says other important ingredients for reaching financial security are completing a financial needs analysis and putting financial goals in writing.
“Even if you get off track, you can turn back to your roadmap,” she says.
When Tommy and Sonya Davis of Fayetteville, Georgia, began working with Turner more than five years ago, they overhauled their financial habits and crystallized their plans for the future. They bought life insurance to protect their family and began saving for the future each month and budgeting religiously.
“We track every dollar to see how much fat we can trim off the meat,” says Tommy, 52, a contract security police officer for moving services.
Living leanly was especially important while Sonya spent several years at home with their two young boys. Now that the Davises are both working again — Sonya, 41, is office supervisor for Clayton County School Police — they’re able to save for college. Getting control of their finances has given the couple a healthier perspective.
“We’re looking at how we can make our money work for us, versus just working for money,” Sonya says.