Financial Hardship in 2025: 37% Would Not Cover a $400 Expense Entirely in Cash
In the 2025 Federal Reserve SHED, 63% of adults would pay a $400 expense entirely using cash or equivalent; 37% would use another method or could not pay. Separately, 12% of adults in 2025 said they could not pay by any method. The other measures below cover different populations and methods.
What Do Current Financial-Hardship Measures Show?
In the Federal Reserve's 2025 Survey of Household Economics and Decisionmaking, 63% of U.S. adults would pay a $400 expense entirely using cash or equivalent; 37% would use another method or could not pay. A separate answer shows 12% of adults in 2025 could not pay by any method.
In Vanguard-administered plans that offer the option, 6% of participants took hardship withdrawals in 2025, up from 5% in 2024. Vanguard notes that plan design, easier administration and rule changes, not only household strain, have pushed the rate higher. Bank of America Institute estimated that nearly 24% of households in its eligible checking-account sample had necessary spending above 95% of observed income.
These figures come from different sources, populations, and questions. Read them as separate context, not as instruments measuring one condition or a sequence in which households exhaust a financial cushion. The personal saving rate was 4.1% in August 2026, down from 4.6% in July 2026 (U.S. Bureau of Economic Analysis data retrieved via FRED). The American Distress Index reads 47.0 (Typical). The composite itself sits higher than 44% of all published quarters since 2005.
Key Statistics at a Glance
The American Distress Index currently reads 47.0 (Typical). The composite itself sits higher than 44% of all published quarters since 2005. The personal savings rate is the input to the index's Safety Net & Buffer domain, and the debt service ratio feeds its Debt Burden domain. The other measures on this page provide separate context. Their populations and methods differ, so this page does not treat them as one sequence leading to credit card defaults, mortgage delinquency, or bankruptcy filings.
How Would Adults Pay a $400 Emergency Expense?
Two widely cited surveys ask different emergency-expense questions. The Federal Reserve's SHED asks how respondents would pay a $400 expense, and counts cash or its equivalent separately. Bankrate asks U.S. adults which one option best describes how they would deal with an unexpected expense of about $1,000. Their answers are not interchangeable.
In 2025, 63% of U.S. adults said they would pay the $400 expense entirely using cash or its equivalent. The remaining 37% said they would use another method or could not pay. That complement combines payment choices with inability; it does not mean 37% lacked the money. The share was the same in 2024. Separately, 12% of adults in 2025 said they could not pay by any method.
Bankrate records a separate payment-method answer: in its 2026 report, 30% of U.S. adults said they would use savings for a $1,000 emergency. Bankrate added a new answer option and switched polling methods in that report, so the reading is not compared with earlier years.
| Survey | Question | Latest | Other answer | Source |
|---|---|---|---|---|
| Fed SHED | How would you pay a $400 expense? | 37% other method or unable | 63% cash or equivalent | Federal Reserve |
| Bankrate | How would you deal with an unexpected $1,000 expense? | 30% from savings | — | Bankrate |
Full data: SHED $400 emergency-expense measure (The $400 Test) · Bankrate emergency savings survey (The Safety Net)
How Often Are Participants Taking Hardship Withdrawals?
Vanguard's annual report measures hardship withdrawals among participants whose plans offer them. In 2025, 6% of those participants took at least one, up from 5% in 2024. Vanguard notes that plan design, easier administration and rule changes, not only household strain, have pushed the rate higher. A hardship distribution is generally taxable; depending on age and circumstances, an additional tax may apply unless an exception applies. The series does not establish that participants first exhausted savings or credit.
The distinction between the two retirement measures matters. At the end of 2025, 13% of participants in Vanguard-recordkept plans that offer loans had a 401(k) loan outstanding, the same as in 2024. A loan and a hardship distribution have different rules and repayment treatment. Their aggregate paths do not prove that the same participants shifted from one to the other. For definitions and context on retirement savings terminology, see our glossary. For the full series, see Hardship Withdrawal Statistics.
401(k) Hardship Withdrawal Rate (Annual)
Vanguard "How America Saves" (annual report based on Vanguard-administered plans). Federal hardship rules changed in 2019–2020, so the 2019 and 2020 bars were measured under different rules from later years.
Full data: Vanguard hardship withdrawal rate (The Cannibalization Rate) · Hardship Withdrawal Statistics
How Many Households Live Paycheck to Paycheck?
Bank of America Institute estimates the share of households in its banking-data sample whose necessary spending exceeds 95% of income. Nearly 24% met that definition in the 2025 analysis, up 0.3 percentage points from 2024 in the same report. Each year in that report uses data through the third quarter. The estimate was 29% for its lower-income group.
The sample appears to include households using Bank of America as their primary bank, with a U.S. checking account for at least 12 months, and observes Bank of America channels such as ACH, cards, and bill pay. Partial banking relationships and spending outside those channels create uncertainty, so the estimate is noncomprehensive and may not represent all U.S. households. The aggregate personal saving rate uses a different population and methodology and cannot supply the missing household-level detail.
Full data: Paycheck-to-paycheck share, Bank of America households (The Squeeze)
What Does the Personal Saving Rate Show?
The saving rate captures the flow of new saving — disposable income minus outlays — as a percentage of disposable income, across the whole country. It was 4.1% in August 2026, down from 4.6% in July 2026. BEA revises recent months with each release. The retained PSAVERT series records 31.8% for April 2020. FRED notes that the series is subject to revision, so this page presents the observation from the stored series rather than labeling it an original-release value.
U.S. Personal Savings Rate (Monthly, 2018–Present)
Bureau of Economic Analysis data retrieved via FRED (PSAVERT). Monthly, seasonally adjusted.
Full time series: Personal saving rate (The Buffer) · Savings Rate Statistics
How Much Buy Now, Pay Later Lending Is There?
Six large buy now, pay later firms in the CFPB's market report originated $43.9 billion of pay-in-four loans in 2023, up from $33.4 billion in 2022, in dollars not adjusted for inflation. That is a year's lending by those firms, not a balance owed and not the whole market. The CFPB's report runs from 2019 through 2023.
The BNPL, SHED, and Vanguard measures do not identify the same people, share a denominator, or establish that one pressure caused hardship withdrawals or emergency-expense responses.
Buy Now, Pay Later Pay-in-Four Originations, Six Large Firms ($B, Annual)
Consumer Financial Protection Bureau Buy Now, Pay Later Market Report. Nominal dollars.
Why These Measures Must Stay Separate
Eight financial measures, from different sources, using different methodologies and measuring different populations. The SHED payment-method complement (37%), the Bank of America Institute sample estimate (24%), and Vanguard hardship withdrawals (6%) cannot be combined into a single household-cushion rate.
Their separate movements remain useful context, but co-movement does not show the same households, a fixed order of events, or a validated lead into default. The American Distress Index uses only its documented inputs; the other measures on this page do not become index inputs merely by appearing together. The Structural Outlook describes validated indicator-pair results and their evidence limits.
For other household measures, including food insecurity, homelessness counts, and difficulty paying usual expenses, see our Household Financial Health Statistics.
Read our research methodology →What Are All the Financial Hardship Indicators?
| Indicator | Value | Period | Signal | Source |
|---|---|---|---|---|
| $400 response: other method or unable | 37% | 2025 | stable | Fed SHED |
| $1,000 Emergency (Bankrate) | 30% | 2026 | no verdict | Bankrate |
| 401(k) Hardship Withdrawals | 6% | 2025 | worsening | Vanguard |
| Personal Savings Rate | 4.1% | Aug 2026 | worsening | BEA/FRED |
| Paycheck to Paycheck | 24% | 2025 | worsening | BofA Institute |
| BNPL Pay-in-Four Originations | $43.9B | 2023 | archived | CFPB |
| Debt Service Ratio | 11.1% | Q2 2026 | stable | Federal Reserve data retrieved via FRED (BOGZ1FL010000346Q + TDSP) |
| 401(k) Loan Rate | 13% | 2025 | stable | Vanguard |
Data Sources and Methodology
CPI measurement basis: Every CPI reading and historical comparison on this page uses its source-owned basis unless explicitly identified otherwise: Cumulative percent change since January 2020 computed from the seasonally adjusted BLS Food-at-Home CPI (CUSR0000SAF11); seasonally adjusted values may be revised.
Federal Reserve
SHED Survey (annual; the survey year and the following year's publication are distinct). Debt service ratio data retrieved via FRED series BOGZ1FL010000346Q + TDSP (quarterly). Both produced by the Board of Governors of the Federal Reserve System.
BEA data retrieved via FRED
Personal savings rate (PSAVERT) published monthly by the Bureau of Economic Analysis. Measures personal saving divided by disposable personal income, seasonally adjusted.
Private Surveys and Records
Vanguard "How America Saves" (recordkeeping data for nearly five million participants in Vanguard-administered plans). Bankrate Emergency Savings Report. Bank of America Institute estimates use observed Bank of America deposit and payment channels for an eligible checking-account sample; partial banking relationships and unobserved spending make the data noncomprehensive and potentially selective.
Consumer Finance
CFPB Buy Now, Pay Later market report: pay-in-four originations by six large firms, 2019 onward.
Frequently Asked Questions
How many Americans are struggling financially in 2025?
No single figure on this page measures everyone who is "struggling." In the 2025 SHED, 63% of U.S. adults said they would pay a $400 expense entirely with cash or equivalent; the remaining 37% would use another method or could not pay. Separately, 12% of adults in 2025 said they could not pay by any method. Bankrate and Bank of America Institute use different questions and samples, so the figures cannot be combined into one population or forecast.
What is the $400 emergency expense test?
The Federal Reserve's annual Survey of Household Economics and Decisionmaking asks how adults would pay a hypothetical $400 unexpected expense. In 2025, 63% said they would pay entirely using cash or its equivalent; 37% would use another method or could not pay. That 37% complement is not an inability rate. The separate 12% figure is the share of adults in 2025 who said they could not pay the expense by any method.
How do hardship withdrawals fit into the broader financial hardship picture?
In 2025, 6% of participants in Vanguard-administered plans that offer the option took a hardship withdrawal, up from 5% in 2024. Vanguard notes that plan design, easier administration and rule changes, not only household strain, have pushed the rate higher. The Bankrate payment-method response and the Fed's $400 question provide separate context; these sources do not establish that participants exhausted savings before taking a withdrawal. For the full series and the tax rules, see our 401(k) hardship withdrawal statistics.
What percentage of Americans live paycheck to paycheck?
Bank of America Institute estimated that nearly 24% of households in its 2025 analysis had necessary spending above 95% of income; the estimate was 29% for its lower-income group. That is a share of Bank of America's own customer sample, not of all Americans. The sample appears to use households with a U.S. Bank of America checking account for at least 12 months and Bank of America-observed payment channels, so partial banking relationships and unobserved spending limit generalization to all U.S. households.
How does financial hardship connect to the American Distress Index?
The American Distress Index currently reads 47.0 (Typical). The composite itself sits higher than 44% of all published quarters since 2005. The personal savings rate is an input to the index's Safety Net & Buffer domain, and the debt service ratio feeds its Debt Burden domain. The other measures on this page are separate context; their populations and methods differ, and this page does not treat them as one causal sequence or default forecast.