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Financial security increases as hiring strengthens, survey shows

Rising interest rates are a widespread worry »

Bankrate's Financial Security Index has climbed higher this month amid strong employment data showing the U.S. economy added 292,000 jobs in December.

The index, which takes into account Americans' answers to questions about their savings, job security and other factors, is now at 101.5, up from 101.1 in December. That data comes despite economic headwinds from China and other developing nations.

"We've seen a lot of consistency, in particular in job security," says Bankrate's chief financial analyst Greg McBride, CFA. "That's really been an area of strength over the last 18 months, underscored by a strong unemployment report in the month of December."

Overall, Americans reported being better off than they were a year ago, thanks to a combination of factors that also included higher net worth and an improved overall financial situation.

One weak spot in the report was debt: 23% of Americans reported feeling less comfortable with their debt this month compared with a year ago. That's up from 18% who said they were uneasy with their debt in December.

"Not surprisingly, with the holiday bills coming in, people were not feeling as rosy about their debt loads now as we've seen in previous months," McBride says.

Savings were another sore point. Nearly 3 in 10 Americans reported being less comfortable with their savings than last year, vs. just 17% who said they were more comfortable.

"It's just a testament to the fact that people don't have enough, they know they don't have enough, and that they're making very little in the way of progress toward it," McBride says.

Some of that lack of progress can likely be chalked up to a lack of strong wage growth, which McBride says "has been the missing ingredient in the economic recovery."

"It helps explain the slow growth in the economy, but at the same time, it's also inhibited Americans' ability to ramp up savings," McBride says.

The survey also asked Americans whether they were concerned about expected Federal Reserve rate hikes in 2016.

The Financial Security Index is based on a national telephone survey made in English and Spanish by Princeton Survey Research Associates International. The survey was conducted Jan. 7-10, 2016, of 1,003 adults living in the continental U.S. The survey has a margin of error of plus or minus 3.6 percentage points.

  • 44% of 30- to 49-year olds are concerned, versus just 37% of those 65 and older.
  • 49% with a high school education or less say they aren't concerned about rising rates, compared with 67% of college graduates.
  • 50% of those earning under $30,000 per year say they're concerned, versus just 30% of those earning $75,000 or more.
  • 27% of men say they're more comfortable with their debt level, versus 18% of women.
  • 24% of Republicans say they're less comfortable with their debt, compared with 16% of Democrats.
  • Those earning $75,000 or more are almost twice as likely as those earning less than $30,000 to be more comfortable with their debt level compared with a year ago, 31% to 18%.
  • Millennials age 18 to 29 are more than twice as likely to say they're more comfortable with their savings compared with a year ago as those 65 years and older, 24% to 10%.
  • Democrats are nearly twice as likely as Republicans to report being happy with their savings versus a year ago, at 23% to 13%.
  • 23% of college graduates feel better about their savings versus a year ago, while just 16% of those with a high school degree or less feel that way.

Editor's note: Percentages may not total 100% due to rounding.

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