The effects of an economic shock, such as an unexpected home or car repair or a sudden loss of income, can be devastating to homeowners on a fixed income, and the United Nations estimates 40 million Americans are living in poverty. Among those, 18.5 million are living in “extreme poverty,” defined as an income of $12,000 or less for a family of four. Estimates range from three-in-four to three-in-five Americans who, while not necessarily in poverty, are living from paycheck to paycheck. More than 40 percent face a high likelihood of material hardship.
Many of those struggling in the day-to-day are not prepared to endure an economic shock, yet approximately 60 percent of American households endured one in a calendar year, according to the Pew Trust. Among those who did experience such a shock, the most expensive median cost was $2,000 and 55 percent of households struggled to make ends meet afterwards.
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