Financial Challenges: Coping With the Unexpected

by

Alicia R. Williams

For too many Americans, a car repair, job loss, pay cut, or medical bill can disrupt household finances, harming the households’ balance sheet and overall well-being for months or even

years.

To better understand the financial and emotional impact of unexpected financial challenges, AARP conducted a national survey of adults ages 30 and older. Researchers asked them about the

emotions they experienced as they dealt with their unexpected challenge, the strategies they used to cope with the challenge and the emotional fallout, and the actions they took to resolve

their financial situation.

The incidence of unexpected financial challenges is significant and impacts many U.S. households.  

challenge in the past year — and during that same time period the majority experienced more than one challenge.Unexpected financial challenges can happen to anyone, regardless of their

income level, generation, gender, or race/ethnicity.However, some groups have a greater propensity to experience an unexpected financial challenge (e.g., Millennials, Gen Xers, women,

communities of color, and those with household incomes of less than $40,000). A medical expense, a necessary repair, and a loss of income are the most often reported types of unexpected

financial challenges.The median cost of an unexpected financial challenge ranges between $3,000 and $4,000. Higher median costs, however, are seen among those with household incomes of

$75,000 or more.

Recovering from an unexpected challenge can take months or even years.

than six months from when the challenge first occurred.To help resolve their unexpected financial challenge, a majority made financial tradeoffs but fewer negotiated a lower bill.In

addition to cutting back on expenses and drawing down savings, three in five delayed paying some of their bills to help pay for their unexpected financial challenge, and half worked more

hours or took other actions to supplement their income. However, fewer than half asked for an affordable payment plan or reduction in the amount they owed.An unexpected financial challenge

often triggers a wide range of emotions — stress, anger, and sadness are the most common. One in five also reported experiencing depression, anxiety, frustration, and/or worry.Many cope with

an unexpected financial challenge by regulating their feelings and keeping the matter private; fewer seek social support.Problem-focused coping strategies used frequently by a majority of

those dealing with an unexpected financial challenge are making a plan of action and concentrating their efforts by taking one step at a time.Emotion-focused coping strategies used

frequently by about half of those dealing with an unexpected financial challenge are keeping their feelings to themselves, not letting their feelings get in the way, and keeping others from

knowing how bad things were.Only about two in five, however, talked with someone about how they were feeling, and fewer than three in ten asked someone they respected for advice or talked to

someone who could do something concrete about their situation. Methodology

The AARP survey was conducted by NORC at the University of Chicago on behalf of AARP. The data were collected using the AmeriSpeak Panel, a probability-based panel developed by NORC at the

University of Chicago. AmeriSpeak is designed to be representative of the U.S. household population.

Interviews for this survey were conducted September 4-19, 2019, in English and in Spanish with adults ages 30 and older, representing the 50 states and the District of Columbia. Respondents

were randomly selected from the AmeriSpeak Panel using area probability and address-based sampling. A total of 1,697 adults completed the survey.

For more information, please contact Alicia R. Williams at [email protected]. For media inquiries, please contact [email protected].

Suggested citation:

Williams, Alicia R. Coping with an Unexpected Financial Challenge: An AARP Survey of Adults 30+. Washington, DC: AARP Research, November 2019. https://doi.org/10.26419/res.00343.001

MORE FROM AARP

Financial Advice About Retirement Should Be Unbiased

Adults 50+ expect professional financial advice to be in their best interest, and they believe that this fiduciary duty should be required.

The Effect of a Universal Automatic IRA With Emergency Savings on Household Wealth

The ability to use payroll deduction to save for the future, and to use some of those reserves to meet inevitable financial emergencies, is key to increasing household wealth. 

Job Loss, Health Problems Worsen Debt Among Adults 50+

A new AARP survey on debt among adults 50+ reveals that crises such as job loss, health problems, and the high cost of living can worsen debt problems.    

Saving for Retirement Is a Struggle for Older Chicagoans

Three quarters of metro Chicago residents ages 45 and older are anxious they aren’t saving enough to live comfortably in retirement, AARP found.

AARP & the US Chamber of Commerce Present: Emergency Savings: Where We Are and the Way Forward

AARP and the U.S. Chamber of Commerce are excited to present a one-day, in-person conference titled Emergency Savings: Where We Are and the Way Forward.

{ "maxItems":5, "itemsPerRow":"3", "rows":"4", "loadMore":"6", "adsNum":"0", "resultsLength":"5" }