The average American feels they need to make $233,000 a year to live financially comfortable, according to a New survey Powered by YouGov for Bankrate which polled over 2,500 people. That’s 310% more than the 2021 salary of the average full-time worker – $75,203 per Census Bureau.
They think they need to earn twice that feeling rich– $483,000. But they will need to save and invest strategically to actually build wealth; Respondents to Charles Schwab’s 2023 Modern Wealth Survey, released last month, said the minimum net worth they needed to be rich was $2.2 million. These staggering numbers are perhaps not surprising given that an unstable economy filled with recession fears and layoffs has left many Bankrate respondents feeling financially insecure.
Inflation was the first obstacle cited by respondents due to their lack of financial security. 63% of them said it keeps them from a comfortable financial place. They also cited the current “economic environment”, their lack of adequate emergency and retirement savings, and high interest rates.
“Being able to pay for current expenses, save for retirement and emergencies, pay down debt, and have more money left over for the occasional ‘splurge’, whatever it is, will likely go along with a sense of relief,” Mark Hamrick, a senior economist at Bankrate , wrote in the report. “Normally, people fantasize about getting ‘rich’, but most aspire to get better than that.”
Other common causes for workers at all income levels: low wages, lack of opportunities for upward job mobility, towering debt, and lack of affordable housing. Nearly three-quarters of Bankrate respondents said they do not currently feel financially secure, but hope; Almost half of them said they expected to reach this milestone “someday”.
The definition of rich is really a matter of opinion
Of course, the concept of affluence is subjective; And a great deal of the definition of “rich” comes from comparison – people tend to assess their wealth by cross-referencing what their closest friends work with.
And the more money Americans earn annually, the more comfortable they will end up with maintaining a lifestyle—much less than feeling wealthy, Pankrat finds. (This explains why lifestyle creep can cause so many hard-to-fix financial problems; once you raise your standard of living, it can be nearly impossible to get rid of it again.)
It also explains why Gen Xers demand the highest salary to feel comfortable And Rich, priced at $273,000 and $575,000, respectively. This makes sense, given that they are in their peak earning years and are likely at the stage of life where they are I can’t help but spend a lot of money, where many often take care of their parents and children. Baby Boomers told Bankrate they need $240,000 to feel financially comfortable, Millennials said $224,000, and in last place, Generation Z said $193,000. A similar pattern followed for each generation of the income required to feel rich. Naturally, the average parental income exceeded the needs of those without parents, or those with children older than 18.
Bankrate also found a gender gap, reflecting the pay gap: Women surveyed asked for about $237,000 to feel secure, while men only needed $229,000. Black Americans, of any ethnic group, needed by far—$339,000—to feel comfortable. (Only white Americans needed $224,000, on average.)
Financial security may be a pipe dream, even for Henrys
The survey results show that in today’s economy, $100,000 is not the dream salary it used to be. He had the same buying power in 2000 that he has today, $175,000, said Nicole Joboyan Werick, founder of Prosperity Wealth Strategies. Wealth Alicia Adamczek. The six earners “probably lived very comfortably” in 2000, said Goboyan Weryk, but today, $100,000 “doesn’t quite go as far as we feel.”
Many young workers, particularly millennials who dealt with two recessions before midlife and incurred massive student debt, have spent their careers struggling to offset a cost of living that seems to be falling further and further out of reach. Much applies to the definition of HENRY (high income and not yet rich), a term he coined Wealth Sean Tully in 2008 to describe well-paid people who don’t save enough to build a lot of wealth. Today, the typical Henry is a millennial with a six-figure income yet feels like he’s living off paycheck to paycheck.
said Miriam, one of those workers luck In April, she initially felt that having a $100,000 starting salary was “unachievable and life-altering.” Then the other shoe fell off.
“In a way it kind of settles down, and it becomes normal,” Miriam said. “For the first couple of months I was like, Wait what? I thought there was going to be a huge pile of money in my checking account. It just doesn’t have the staying power that I thought it would.”
High six-figure incomes are still out of reach for most American workers, at least in the near term. But the pressure to keep earning more and more just for the sake of feeling financially comfortable may explain the jump in popularity of side businesses, multiple work, or — when all else fails — marriage to the wealthy.