From persistent inflation to rising interest rates, it’s extremely expensive to have a weak private financial situation in 2023 — but in today’s era, it costs a lot to be economically comfortable, also.
Americans feel they’d want to make roughly$ 233, 000 a year on average to remain stable or comfortable with their money, a fresh Bankrate survey finds. To be wealthy and achieve financial independence, Americans say they’d want to make about two days more: roughly$ 483, 000 on average, according to the ballot. Both numbers are significantly larger than the average earnings full- time, year- round workers made in 2021 ($ 75, 203 ), according to , Census Bureau data.
Americans ‘ rising income needs highlight the mounting affordability issues that households are encountering as they increase their wealth, a challenge many were navigating before the pandemic. More money appears to be a source of greater financial success at a time when the median home price has increased by 40 % over the past 20 years and the average college tuition has more than doubled. On the flip side, Americans ‘ buying power judged by their personal income has climbed a smaller 21 % pace since 2003, according to the , Department of Commerce’s per- person measures.
Bankrate’s key takeaways on Americans ‘ path to financial freedom
Americans are more than twice as likely to feel secure financially as Americans. More than one in four ( 28 % ) Americans declare being completely financially secure. In contrast, 26 % of people who claim they wo n’t ever be financially secure have a majority ( 72 % ) who do not.
—U. Americans are disproportionately unable to feel financially secure due to economic factors in the United States. More than 3 in 5 Americans who are financially insecure ( or 63 % ) attribute high inflation to their inability to be financially secure, followed by 48 % who attributed the general economic environment to rising interest rates, and 36 % who attributed it to rising inflation.
American people’s financial security is also impacted by their personal finances. About 2 in 5 of them attributed insufficient retirement funds ( 41 % ) and emergency funds ( 42 % ) as contributing factors that prevented them from feeling financially secure. More than 1 in 4 blamed high or revolving debt ( 26 % ), renting instead of owning or getting a home ( 25 % ).
Many Americans believe they need even more pay than the national average, despite wealth gaps and fluctuating costs of living. Women, on average, say they’d need to earn roughly$ 237, 000 annually to be comfortable and about$ 502, 000 a year to feel rich — which is nearly$ 37, 000, or 8 %, more than men. The average income that Black Americans, baby boomers, Generation Xers, as well as Northeasterns and Westerners say they’d need to feel both comfortable and rich is also larger.
Most Americans say they are n’t financially secure
Americans claim that their finances are n’t stable at a time when the country’s ability to grow at a rate that is uncertain. For more than a year now, economists have been , predicting a recession , could knock job growth and Americans ‘ incomes off course as the Fed combats , stubbornly high prices , with the , fastest pace of rate hikes , since the 1980s. About 1 in 4 ( or 28 % ) say they’re completely financially secure, revealing that most Americans ( 72 % ) are experiencing the opposite.
Most people who are financially insecure have hope for the future. More than 2 in 5 Americans ( or 46 % ) say they hope to one day have financial security. Yet, 26 % claim they are not entirely financially secure and never will be.
Financial security is more prevalent in white men than in their counterparts, and it also tends to rise as income and education levels rise.
Men ( 30 % ) are more likely than women ( 26 % ) to say they are completely financially secure. Women ( 29 % ) have a higher likelihood of never being financially secure than men ( 23 % ).
White Americans ( 31 % ) are more likely than Black and Hispanic Americans ( 21 % and 22 %, respectively ) to say they are completely financially secure. But white Americans ( at 41 % ) were the least likely to expect they’ll achieve complete financial security in the future, versus 59 % for Black Americans and 57 % for Hispanic Americans.
Generation X ( ages 43- 58 ) was the least likely to feel financially secure compared to other generations, at:
—25 % of Generation Z ( ages 18- 26 )
—28 % of millennials ( ages 27- 42 )
—19 % of Gen X
—32 % of baby boomers ( ages 59- 77 )
However, younger generations have less hope than older generations in terms of achieving that security.
—13 % of Gen Z say they are n’t completely secure and likely never will be, versus
—19 % of millennials,
—30 % of Gen X, and
—35 % of baby boomers.
The U. S. economy is keeping Americans from achieving financial security
Depending on the individual’s finances and objectives, financial security can vary for each American. Yet, personal finance experts say it can look like anything from , affording an unplanned expense , without a credit card to being in a position where money is n’t a major stressor.
A , separate Bankrate survey published in May , found money has a negative impact on more than half ( 52 % ) of Americans ‘ mental health.
” Being capable of paying for ongoing expenses, saving for retirement and emergencies, paying down debt and having a bit more left over for an occasional ‘ splurge,’ whatever it might be, is more likely to be aligned with being comfortable”, Hamrick says. ” Typically, people fantasize about the notion of getting’ rich,’ but most aspire to get by or a bit better than that”.
Factors related to the U. S. economy are overwhelmingly what’s holding back Americans ‘ finances, Bankrate’s survey finds. Nearly half ( 48 % ) blame the general economic environment, while 36 % point to rising interest rates as what prevents them from feeling financially secure. More than 3 in 5 Americans ( or 63 % ) point to high inflation as a contributing factor.
High inflation was the top barrier for financially insecure Americans regardless of income, residency, education and demographics.
Even more likely to cite high inflation were Gen Xers ( 68 % ), baby boomers ( 66 % ) and Americans earning between$ 80, 000 and$ 99, 999 a year ( 78 % ) who are n’t completely financially secure. These middle-class people were also more likely to express concern for the economic environment ( 61 % ) and rising interest rates ( 47 % ) than for the economy ( 61 % ).
Gen Xers, meanwhile, are more likely than other generations to blame the economic environment, at:
—39 % of Gen Z
—44 % of millennials
—57 % of Gen X
—48 % of baby boomers
Americans ‘ individual financial circumstances are also preventing them.
Financially insecure Americans also point to more specific financial factors as what prevent them from achieving financial security, in addition to economic factors. Those include:
—Insufficient emergency savings ( 42 % )
— Unavailable retirement funds ( 41 % )
—Low pay/not enough career mobility ( 33 % )
—High or revolving debt ( 26 % )
—Renting instead of owning/housing affordability ( 25 % )
—Other ( 9 % )
Of those five finance- specific factors, insufficient retirement funds was the most heavily cited barrier for most financially insecure groups, including men ( 41 % ), Northeasterners ( 42 % ), Midwesterners ( 45 % ), white Americans ( 49 % ), Gen Xers ( 49 % ), boomers ( 55 % ) and Americans in the income groups spanning between$ 50, 000 and$ 99, 999 a year ( a combined 51 % ).
Insufficient emergency funds, meanwhile, received the most blame among women ( 43 % ), Southerners ( 41 % ), Westerners ( 42 % ), Black Americans ( 32 % ) and Americans earning under$ 50, 000 a year ( 44 % ) who are n’t completely financially secure.
Hispanic Americans ( 38 % ), Gen Zers ( 44 % ), and millennials ( 44 % ), both of whom had financial insecurities, cited low pay and limited career mobility.
To achieve financial security, Americans say they need to make$ 233K a year on average
Put a number on financial security, and that may be a major six- figure annual income: Americans feel they’d need about$ 233, 000 a year on average to be financially comfortable, Bankrate’s poll found.
Americans were closely split on whether they’d need to earn$ 100, 000 or more ( 45 % ) or less than$ 100, 000 ( 44 % ) to feel financially comfortable. Nearly 1 in 3 ( or 30 % ) say they’d need to earn$ 150, 000 or more. Meanwhile, 4 % say they’d need to earn between$ 500, 000 and$ 999, 000 to feel comfortable, and 7 % say they’d require$ 1 million or more.
Slightly more than 1 in 10 people ( or 11 % ) do n’t know how much money they’d need to make to feel financially comfortable.
Americans in the West and the Northeast, which have historically been expensive cities like San Francisco and New York City, said in a Bankrate’s poll that they anticipate needing the highest income of any other region to feel financially secure. That amounted to nearly$ 246, 000 on average for Americans living in the West, followed by about$ 243, 000 for Northeasterners.
Even so, Americans in the South — home to , booming oil and tech cities , — are n’t too far behind. The average Southerner feels they’d need approximately$ 236, 000 a year to be financially secure. Americans in the Midwest feel they’d need nearly$ 206, 000, 12 % lower than the national average and 16 % lower than the income needed for Westerners.
Financial comfort looks like about$ 322, 000 on average for Black Americans, the most of any group and 44 % higher than the income White Americans reported requiring ( roughly$ 224, 000 on average ).
The typical Gen Xer believes they would need to make the most money to feel financially secure ( roughly$ 273, 000 ). Baby boomers came in second, requiring nearly$ 240, 000 on average. That was 7 % more than the income the average millennial says they’d need ( about$ 224, 000 ) and 24 % higher than the income Gen Zers cited on average ($ 193, 000 ).
Parents with children under 18 feel they’d need a higher income annually ( approximately$ 247, 000 on average ) to be financially secure or comfortable than both those with children older than 18 ( about$ 236, 000 ) and those without ( nearly$ 222, 000 ).
Women, meanwhile, say they would need to earn about 4 % more than men to feel financially comfortable or secure ( roughly$ 237, 000 on average versus nearly$ 229, 000 ).
Being “rich” in the U. S. looks like an annual income worth$ 483K on average
Even if they were earning about$ 233, 000 a year, the average American feels they’d need an even bigger annual income to consider themselves rich, Bankrate’s poll found.
Americans believe that to be considered for earning$ 483, 000 on average, which is also more generally accepted as having financial freedom. About a third ( or 31 % ) feel they’d need to earn$ 500, 000 or more. About 21 % say they’d need to earn$ 1 million or more.
On average, women feel they’d need to earn about$ 502, 000 a year to feel rich, about 8 % more than men ( at nearly$ 465, 000 ). Parents with children under 18 feel as though they can live comfortably on average and feel wealthy or financially free, whereas those with children 18 or older need to earn around$ 505, 000. Those without children say they’d need to make$ 475, 400 a year to feel financially free or rich.
Gen Xers feel they’d need to earn the most of any generation annually ( nearly$ 575, 000 on average ) — 50 % more than Gen Z ( about$ 382, 000 ), the least of the generations. Baby boomers say they would need to make nearly$ 521, 000 on average, and millennials feel they would need to make nearly$ 444, 000.
Black Americans say they’d need to earn roughly$ 538, 000 a year on average, higher than any other group, including nearly$ 481, 000 for white Americans and about$ 449, 000 for Hispanic Americans.
Lifestyle inflation? Americans need to feel both comfortable and wealthy the more money they make each year.
The income Americans report needing to earn more money than any other is more obvious because it makes them feel wealthy and financially secure.
Americans making under$ 50, 000 a year say they’d feel financially secure or comfortable on an average income worth nearly$ 184, 000 a year. That rose to:
—$ 208, 000 a year for those earning between$ 50, 000 and$ 79, 999,
—$ 246, 000 a year for those earning between$ 80, 000 and$ 99, 999, and
—$ 341, 000 a year for those making$ 100, 000 or more.
More than 3 in 5 ( or 61 % ) Americans earning under$ 50, 000 feel they’d be comfortable earning less than$ 100, 000. That number falls to as low as 18 % for those who are already making$ 100, 000 or more.
Americans largely have their eyes set on earning more money. About a quarter of people earning under$ 50, 000 ( 24 % ) feel they do n’t need to make any more money than they already do to feel financially comfortable, according to Bankrate’s data. That compares with 18 % of people earning between$ 50, 000 and$ 79, 999, as well as 22 % of people earning between$ 80, 000 and$ 99, 999.
It also is n’t often that people are making more money than feel they’d need to be comfortable. Just 5 % of people earning between$ 50, 000 and$ 79, 999 say they’d be content making under$ 50, 000. That compares with 4 % of people making$ 80, 000 and$ 99, 999 who say they’d feel financially comfortable earning under$ 50, 000 and 10 % who think they’d be financially comfortable earning a salary between$ 50, 000 and$ 79, 999.
To feel rich, Americans say they would need average annual incomes worth approximately:
—$ 406, 000 if they’re already earning less than$ 50, 000,
—$ 494, 000 on salaries between$ 50, 000 and$ 79, 999,
—$ 499, 000 making between$ 80, 000 and$ 99, 999, and
—$ 600, 000 for Americans making$ 100, 000 or more.
One in 4 ( 25 % ) of those earning$ 100, 000 a year or more say they’d need to make$ 1 million or more a year to feel rich.
Americans intend to raise discretionary spending by getting so much.
Why do Americans have a higher bar for comfortability, the more money they make? One reason may be that they are altering both their income and standard of living.
If given a raise in pay, the majority ( or 72 % ) of Americans would plan to increase their discretionary spending. The most common ways include:
—Book a vacation/travel ( 32 % )
—Updating their home with new furniture/appliances ( 30 % )
—Making donations to charities ( 22 % )
—Upgrading to a nicer car ( 20 % )
—Dining out more often ( 19 % )
—Buying electronics ( 18 % )
—Attending more live entertainment ( 16 % )
—Buying jewelry, clothing or other apparel ( 14 % )
—Other ( 10 % )
4 ways to help boost your financial security
The U. S. economy has been the ultimate , wrecker of Americans ‘ financial goals. Between high inflation and pay that , is n’t fully keeping up , with those rising prices, you should never put all of the blame on yourself if you’re feeling insecure with your finances.
Financial security, however, is more of a lifestyle than a box to be checked. It involves developing healthy habits, and it goes beyond just making a certain amount of money. Even those with the highest earnings may feel financially insecure if their retirement savings and retirement funds are lacking. What’s even more exciting is achieving financial stability where you can pay your bills, pursue your financial goals, and give yourself a reward for your hard work than you should define success as simply being wealthy.
It might be worthwhile to remember that there are many ways to live a fulfilling life with modest incomes, Hamrick advises those who might bemoan the fact that they may not have made it wealthy.
1. Separate what you can and ca n’t control
Americans ca n’t do anything to alter the course of the economy, so making changes to your financial security might start with doing your best to control what’s causing your anxiety.
Expensive home prices, for example, might keep you from buying a home — but you , do n’t have to be a homeowner , to grow your wealth. Prioritize saving for longer- term goals by making consistent contributions to an investment account, such as a 401 ( k ) or a Roth IRA if you’re eligible.
” Having a strategy, including maintaining a budget, saving for emergencies and for retirement, and paying down debt, must be part of the central gameplan”, Hamrick says. ” The specifics will change. But just by being focused, there’s a good chance that success can be achieved over the long- term”.
2. Do n’t let go of establishing small financial objectives.
Do n’t feel pressured to make your head spin when pursuing long-term financial goals. Remember: Any step — , no matter how small , — can move you and your finances in the right direction.
If you ‘re , starting from scratch with your emergency fund, concentrate on saving your first$ 100, then your first$ 500, on a timeline that works best for your finances. Breaking up the process of saving into small chunks makes it seem more feasible to stash away six months ‘ worth of expenses.
Remember how valuable time in the market and compound interest can be if a tight budget is keeping you from investing for retirement or another big-picture goal. Someone who stopped investing for three years in their mid- 20s, for example, would miss out on , almost$ 200, 000 in retirement savings , by the time they were 70, assuming an 8 % annual return and$ 2, 400 invested per year when contributing.
3. Save for the good times as much as the bad ones.
Anytime you get a pay raise, it’s a wise time to ramp up your contributions toward saving for both emergencies and “fun” spending, too. Knowing how much discretionary spending you have will help you avoid going overboard and turning to credit cards when you’re bitten by the holiday or shopping bug.
Finding a balance between the need to have and the desire to have is a good place to start, Hamrick says. ” All too often, decisions on spending are not necessarily based on deep thought or consideration, but desire or emotion. There’s a cost to that”.
4. Set realistic salary expectations and become comfortable with marketing your own products.
According to Bankrate’s poll, Americans ‘ perceptions of financial security also depend on earning a living wage. Every American, however, has different earnings potential, depending on the industry they work in.
An education is a a a a a a a a clear way to increase your lifetime earnings, but if earning a high salary is important to you, it may be wise to conduct research on the median wage of workers in your desired industry. Use the , Department of Labor’s resources , to help inform you of what a realistic career path for you could look like. If you’re going to be borrowing for your education, use that research to also , guide you through the student loans process. One rule of thumb:  , Avoid taking out a bigger balance , than what your salary could be after graduation.
Consider improving your negotiating abilities if you’re already working and attempting to increase your earnings. Most of the time, it comes down to speaking your business ‘ language. Learn how to discuss the significance of your work and why it matters.
” For some, being wealthy might be seen as having the ability to buy things they do n’t need”, Hamrick says. ” If someone accumulates wealth along the way, they will have more power.” That does n’t necessarily equate to being happier, of course. But it makes many things easier to navigate”.
Methodology
YouGov Plc was given by Bankrate to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2, 521 U. S. adults. Fieldwork was undertaken June 5- 7, 2023. The survey was conducted online and adheres to stringent quality standards. It used a non-probability-based sample that used both quotas upfront during collection and a weighting scheme on the back end that was developed and tested to produce results that were nationally representative.
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