"A big gap exists between the volatility almost all Americans are exposed to across four of five income quintiles in our database and the liquid financial buffer they have," said Diana Farrell, the institute's president.
The picture isn't as grim for everyday volatility, but many consumers barely have enough to make it through those less-severe swings in their finances. In a test of the higher end of volatility that the think tank sees in Chase's consumer database, the median household had to come up with $4,800 but had only $3,000 in liquid assets. At the more typical level of volatility, a household of people between 45 and 54 needed $3,200.
Paying big medical bills had a lasting impact on financial stability. Many families have to turn to credit card debt to cover big medical payments. "A year after the extraordinary medical payment families still have 9 percent more revolving credit card debt and 2 percent lower cash reserves than baseline levels," according to the report.
That shows how intertwined physical health can be with financial health and the stark trade-offs many American families face today.
This article was provided by Bloomberg News.