(Bloomberg) — Five years after the recession ended, manyAmericans still teeter on the financial brink, barely prepared tohandle an emergency expense and aging toward retirements they haven’t saved for, aFederal Reserve report shows.

About 47 percent of 5,896 respondents in the Fed’s 2014household survey, taken last October and November, wouldn’t be ableto cover an emergency $400 expense without selling something orborrowing money.

While that marks an improvement from 52 percent last year, thereport states that it shows many Americans to be “ill-prepared fora financial disruption.”

The survey paints an image of fragile households, seemingly atodds with climbing consumer confidence and a healing economy. Thefindings demonstrate that the hangover from the financial crisisand downturn of 2007 to 2009 still weighs heavily on family balancesheets.

“We are failing as an economy if we have a huge swath ofAmerican households who can’t come up with $400,” said Josh Bivens,research and policy director at the Economic Policy Institute inWashington. “The really dire financial situations” of many surveyrespondents can be largely attributed to “the fact that we’re stillfar from fully recovered from the Great Recession.”

The report comes two weeks before Fed officials meet to continuethe debate over when the economy will be healthy enough for thefirst interest-rate increase since 2006.

On the whole, the report’s authors say Americansare better off than they were a yearearlier, pointing to a 3 percentage-point gain in the share ofrespondents who said their families are “doing okay” or “livingcomfortably.”

For most households, that represents “only mild improvements intheir overall well-being,” the report’s authors say.

Long-term problems persist. About 31 percent of non-retireeshave no retirement savings or pension,according to the report, including one-quarter of people over theage of 45.

About 28 percent of people who plan to retire and gave anexpected retirement age said they will work toage 70 or later.

In a sign that underemployment persists in the economy, thesurvey found that 36 percent of working respondents who aren’tself-employed said they’d prefer to work more hours at theircurrent wage. Among those who work part time, the share is evenhigher at 49 percent.

Medical expenses

Underemployment and lack of preparation for emergency orretirement expenses aren’t the sole signs of economic vulnerabilityin the report: Nearly a third of respondents had to forgo somemedical treatment in the past year because they couldn’t afford it,for instance. One-sixth of people were denied credit, offered lesscredit than they wanted or didn’t apply for credit for fear ofbeing denied.

“The findings in this survey highlight that economic challengesremain for a significant portion of the population,” the reportstates. “Although the U.S. economy is recovering from the GreatRecession and most individuals appear to be generally stablefinancially, there are clearly segments of the population who arestill struggling on one or more dimensions.”

Underwater mortgages

In one especially clear sign of the downturn’s scarring, 14percent of mortgage holders reported owing more than what theirhome is worth. People in the West were most likely to be underwateron their mortgages, at 17 percent, while people in the Northeastwere least likely, at 11 percent.

What’s more, renters who wanted to own were encounteringfinancial barriers that prevented them from buying. Some 81 percentof renters indicate that they would prefer to own their home ifthey could afford to buy one, yet 50 percent can’t afford a downpayment and 31 percent said they couldn’t qualify for amortgage.

“The survey results highlight the need to continue to monitor”populations that could experience economic hardship if they cameacross financial or economic disruption, the report states, and to“assess the extent to which they are, or are not, benefiting frombroader economic recovery.”

--With assistance from Victoria Stilwell inWashington.

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