A latest report from the Federal Reserve examines how Americans view their overall financial health — essentially probing whether or not they’re financially higher off than they were a yr ago.

The Fed’s Economic Well-Being of U.S. Households survey for 2023 found that barely fewer Americans were higher off in 2023 in comparison with 2022. It also revealed some key differences in financial well-being related to demographic groups and a few of the key challenges.

Younger adults struggling greater than older adults

Overall, the 2023 report revealed that 72% of adults were doing pretty much financially. Specifically, 39% said they were “doing okay” while 33% were “living comfortably.” About 19% said they were “just getting by” while 9% said they were “finding it difficult to get by.”

The 72% of adults who were doing a minimum of okay was down barely from 73% in 2022 and 6 percentage points lower than 2021, when 78% said they were a minimum of doing okay.

Nonetheless, there have been some stark differences based on demographics. For instance, the proportion of those doing well amongst 18- to 29-year-olds was 3 percentage points lower at 66%, while the number was 4 points lower for those aged 30 to 44, at 66%.

On the flip side, the numbers for older Americans were up, as 72% of 45- to 59-year-olds and 82% of those over age 60 said they were doing okay, up 1 percentage point in each cases.

Moreover, only 60% of lower- and moderate-income Americans were doing well, down 2 points from 2022, while 77% of middle- or upper-income adults were doing okay — similar to 2022.

There have been also differences amongst racial and ethnic groups. The one group to see higher numbers in 2023 was black adults, with 68% saying they were doing well in comparison with 64% the previous yr. The odds for Asians (84% to 82%), white adults (77% to 76%) and Hispanics (64% to 61%) fell yr over yr.

Biggest financial challenges

By way of financial challenges, 35% of Americans ranked inflation as their biggest, up from 33% in 2022, followed by basic living expenses at 21%, which was down from 22% the previous yr. The third-biggest challenge was housing at 12%, up from 10% the previous yr.

Further, some 65% said that changes in prices compared with the prior yr had made their financial situation worse, with 19% saying it made their financial situation much worse.

Regarding financial resiliency, 63% said they might cover a $400 emergency expense completely with money, which was similar to 2022. Of the 37% that would not, 16% said they might put it on a bank card, 10% said they might borrow from a friend, and 13% said they might not pay for the expense immediately.

The study also checked out the growing financial burden of rent. Overall, the median monthly rent jumped 10% in 2023 to $1,100. Further, 19% of renters reported being behind on their rent in some unspecified time in the future up to now yr, which is 2 percentage points greater than in 2022.

Childcare proved to be one other major expense, because the the median cost for childcare was $800 per family per 30 days and $1,100 for many who paid for 20 or more hours of childcare each week. For perspective on how big of a piece out of the budget childcare is, the standard family spent about 50% to 70% as much per 30 days on childcare costs as they did on their housing or rent payment.

Retirement savings on or astray?

The report also revealed that more Americans believed they were heading in the right direction to satisfy their retirement savings goals in 2023 in comparison with 2022. Specifically, 34% of non-retirees thought their retirement savings plan was heading in the right direction, up from 31% in 2022.

Nonetheless, this continues to be lower than the 40% reading in 2021. It also reveals that some 66% feel they should not heading in the right direction, so there stays loads of work to do there.

Moreover, 80% of current retirees said they were doing a minimum of okay financially, which is a better percentage than adults overall. Further, 45% of adults said they were mostly or very comfortable selecting and managing their investments, while 55% of adults said they were either not comfortable or only barely comfortable.

By way of how Americans are investing for retirement, 61% have a 401(k) or IRA, while 21% have a pension. As well as, 54% have a savings or money market account, while 31% have a portfolio of stocks, bonds, mutual funds, or exchange-traded funds (ETFs) outside of their 401(k) or pension.

Moreover, 23% had money in a life insurance policy. Finally, about 10% of non-retired adults borrowed from their retirement accounts last yr.

The report data comes from the Fed’s Survey of Household Economics and Decision Making (SHED), which was conducted from Oct. 20 through Nov. 5, 2023. It included responses from about 11,400 participants.