From stubborn inflation to rising interest rates, it’s exceptionally expensive to have a shaky personal financial situation in 2023 — but in today’s era, it costs a lot to be financially comfortable, too.

Americans feel they’d need to earn approximately $233,000 a year on average to be secure or comfortable with their finances, a new Bankrate survey finds. To be rich and achieve financial freedom, Americans say they’d need to make about two times more: roughly $483,000 on average, according to the poll. 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’ income needs highlight mounting affordability challenges that households are facing when it comes to growing their wealth — a problem many were navigating long before inflation skyrocketed in the aftermath of the pandemic. More money seems like it may beget more financial success at a time when college tuition has more than doubled and the median home price when adjusted for inflation has climbed 40 percent over the past 20 years. On the flip side, Americans’ buying power judged by their personal income has climbed a smaller 21 percent pace since 2003, according to the Department of Commerce’s per-person measures.

Structural or long-term changes have been injurious to Americans’ ability to manage their personal finances. Where there was a time in the U.S. when a married couple, with children, could get by with a single-wage earner in the house, those days are mostly vestiges of the past.
— Mark Hamrick, Bankrate senior economic analyst

Bankrate’s key takeaways on Americans’ path to financial freedom

  • Americans are more than two times more likely to feel financially insecure than secure. Slightly more than 1 in 4 (28 percent) Americans say they are completely financially secure. That compares with the majority (72 percent) who say they are not, which includes 26 percent who expect they’ll never be completely financially secure.
  • U.S. economic factors are overwhelmingly keeping Americans from feeling financially secure. More than 3 in 5 financially insecure Americans (or 63 percent) say high inflation is keeping them from being financially comfortable or secure, along with 48 percent who blamed the economic environment more broadly and 36 percent who pointed to rising interest rates.
  • Americans’ personal finances are also interfering with their financial comfort. About 2 in 5 each blamed insufficient retirement funds (41 percent) and emergency funds (42 percent) as factors keeping them from feeling financially secure. More than 1 in 4 blamed high or revolving debt (26 percent) and renting instead of owning or housing affordability (25 percent).
  • Highlighting wealth gaps and varying costs of living, many Americans feel they need even more pay than the national average. 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 percent, 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 aren’t financially secure

Americans indicate that their finances aren’t stable at a time when the economy’s continued growth is in question. 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 percent) say they’re completely financially secure, revealing that most Americans (72 percent) are experiencing the opposite.

Most who are financially insecure have hope for the future. More than 2 in 5 Americans (or 46 percent) say they expect to achieve complete financial security someday. Yet, 26 percent say they are not completely financially secure and likely never will be.

White and male Americans are more likely than their counterparts to feel financially secure, and financial security also tends to rise with income and education levels.

Men (30 percent) are more likely than women (26 percent) to say they are completely financially secure. Women (29 percent) are more likely to expect to never be financially secure than men (23 percent).

White Americans (31 percent) are more likely than Black and Hispanic Americans (21 percent and 22 percent, respectively) to say they are completely financially secure. But white Americans (at 41 percent) were the least likely to expect they’ll achieve complete financial security in the future, versus 59 percent for Black Americans and 57 percent for Hispanic Americans.

Generation X (ages 43-58) was the least likely to feel financially secure compared to other generations, at:

  • 25 percent of Generation Z (ages 18-26)
  • 28 percent of millennials (ages 27-42)
  • 19 percent of Gen X
  • 32 percent of baby boomers (ages 59-77)

Yet, older generations are less hopeful than younger generations about someday achieving that security.

  • 13 percent of Gen Z say they aren’t completely secure and likely never will be, versus
  • 19 percent of millennials;
  • 30 percent of Gen X; and
  • 35 percent of baby boomers.

The U.S. economy is keeping Americans from achieving financial security

Financial security looks different for every American, depending on their individual finances and goals. 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 isn’t a major stressor.

A separate Bankrate survey published in May found money has a negative impact on more than half (52 percent) 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. More than 3 in 5 financially insecure Americans (or 63 percent) point to high inflation, nearly half (48 percent) blame the economic environment more broadly and 36 percent point to rising interest rates as what’s keeping them from feeling financially secure.

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 percent), baby boomers (66 percent) and Americans earning between $80,000 and $99,999 a year (78 percent) who aren’t completely financially secure. Those middle-income earners were also most likely to suggest they’re feeling a pinch from the economic environment (61 percent) and rising interest rates (47 percent).

Gen Xers, meanwhile, are more likely than other generations to blame the economic environment, at:

  • 39 percent of Gen Z
  • 44 percent of millennials
  • 57 percent of Gen X
  • 48 percent of baby boomers

Americans’ individual financial situations are also holding them back

Beyond economic factors, financially insecure Americans also point to more specific financial factors as what’s keeping them from achieving financial security. Those include:

  • Insufficient emergency savings (42 percent)
  • Insufficient retirement funds (41 percent)
  • Low pay/not enough career mobility (33 percent)
  • High or revolving debt (26 percent)
  • Renting instead of owning/housing affordability (25 percent)
  • Other (9 percent)

Of those five finance-specific factors, insufficient retirement funds was the most heavily cited barrier for most financially insecure groups, including men (41 percent), Northeasterners (42 percent), Midwesterners (45 percent), white Americans (49 percent), Gen Xers (49 percent), boomers (55 percent) and Americans in the income groups spanning between $50,000 and $99,999 a year (a combined 51 percent).

Insufficient emergency funds, meanwhile, received the most blame among women (43 percent), Southerners (41 percent), Westerners (42 percent), Black Americans (32 percent) and Americans earning under $50,000 a year (44 percent) who aren’t completely financially secure.

Financially insecure Hispanic Americans (38 percent), as well as Gen Zers and millennials (44 percent each) pointed to low pay and not enough career mobility most.

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 percent) or less than $100,000 (44 percent) to feel financially comfortable. Nearly 1 in 3 (or 30 percent) say they’d need to earn $150,000 or more. Meanwhile, 4 percent say they’d need to earn between $500,000 and $999,000 to feel comfortable, and 7 percent say they’d require $1 million or more.

Slightly more than 1 in 10 people (or 11 percent) don’t know how much money they’d need to make to feel financially comfortable.

Home to historically pricey cities such as San Francisco and New York City, Americans in the West and the Northeast reported in Bankrate’s poll that they anticipate needing the highest income of any other region to feel financially comfortable. 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 — aren’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 percent lower than the national average and 16 percent 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 percent higher than the income White Americans reported requiring (roughly $224,000 on average).

The average Gen Xer feels they’d need to earn the most of any generation to feel financially comfortable (about $273,000 on average). Baby boomers came in second, requiring nearly $240,000 on average. That was 7 percent more than the income the average millennial says they’d need (about $224,000) and 24 percent 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 percent 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 feel they’d need to earn about $483,000 on average to fall in that category — also more broadly defined as achieving “financial freedom.” About a third (or 31 percent) feel they’d need to earn $500,000 or more. About 21 percent 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 percent more than men (at nearly $465,000). Parents with children under 18 feel they’d be satisfied making about $475,000 a year on average to feel rich or financially free, while those with children 18 or over would need to make about $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 percent 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? The more money Americans make a year, the more money they need to feel both comfortable and rich

One link is clearer than any other: The more money Americans make, the higher the income they report needing to earn — both for feeling financially comfortable and rich.

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 percent) Americans earning under $50,000 feel they’d be comfortable earning less than $100,000. That number falls to as low as 18 percent for those who are already making $100,000 or more.

Americans largely have their sights set on making more money. About a quarter of people earning under $50,000 (24 percent) feel they don’t need to make any more money than they already do to feel financially comfortable, according to Bankrate’s data. That compares with 18 percent of people earning between $50,000 and $79,999, as well as 22 percent of people earning between $80,000 and $99,999.

It also isn’t often that people are making more money than feel they’d need to be comfortable. Just 5 percent of people earning between $50,000 and $79,999 say they’d be content making under $50,000. That compares with 4 percent of people making $80,000 and $99,999 who say they’d feel financially comfortable earning under $50,000 and 10 percent 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 percent) 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 plan to increase their discretionary spending with a raise

Why do Americans have a higher bar for comfortability, the more money they make? One reason: They may be adjusting their standard of living along with their salary.

The majority (or 72 percent) of Americans say they would plan on increasing their discretionary spending if they were to receive a pay increase. The most common ways include:

  • Book a vacation/travel (32 percent)
  • Updating their home with new furniture/appliances (30 percent)
  • Making charitable contributions (22 percent)
  • Upgrading to a nicer car (20 percent)
  • Dining out more often (19 percent)
  • Buying electronics (18 percent)
  • Attending more live entertainment events (16 percent)
  • Buying jewelry, clothing or other apparel (14 percent)
  • Other (10 percent)

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 isn’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 building beneficial habits — and it’s about more than earning a specific income. Insufficient retirement funds and savings can leave even those with the highest earnings feeling financially insecure. Rather than defining success only as becoming wealthy, what’s worth celebrating even more is reaching a financial position where you can cover your bills, pursue your financial goals and reward yourself for your hard work.

“For those who might bemoan the fact that they’ve not struck it rich, it might be worth remembering that there are many ways of living a fulfilling life through modest incomes,” Hamrick says.

1. Separate what you can and can’t control

Americans can’t do anything to change the direction of the economy, so increasing your financial security may start first with doing your best to limit what’s triggering your anxiety.

Expensive home prices, for example, might keep you from buying a home — but you don’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 details are going to vary. But just by being focused, there’s a good chance that success can be achieved over the long-term.”

2. Don’t shy away from setting small financial goals

Long-term financial goals can seem daunting but don’t feel like you have to make your head spin. 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 chunks makes the goal of stashing away six months’ expenses seem more attainable.

Meanwhile, if a tight budget is keeping you from investing for retirement or another big-picture goal, remember just how valuable time in the market and compound interest can be. 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 percent annual return and $2,400 invested per year when contributing.

3. Save for the fun times just as much as the tough times

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. That way, you know how much discretionary money you have to spend — helping you avoid going overboard and turning to credit cards when you get bit by the shopping or vacation bug.

“A good place to begin is to strive to live beneath one’s means, striking a balance between the need to have versus want to have,” 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 get comfortable with marketing yourself

Americans in Bankrate’s poll are indicating that financial security also comes down to making a wage they can live on. Every American, however, has different earnings potential, depending on the industry they work in.

An education is a clear way to help boost your lifetime earnings, but if a high salary is important to you, it may be wise to research 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.

If you’re already working and trying to boost your earnings, consider also improving your negotiating skills. Most of the time, it comes down to speaking your business’ language. Learn how to talk about the value of your work and why it matters.

“For some, being wealthy might be seen as having the ability to buy things they don’t need,” Hamrick says. “If someone attains wealth along the way, more power to them. That doesn’t necessarily equate to being happier, of course. But it makes many things easier to navigate.”

Methodology

Bankrate commissioned YouGov Plc 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 carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

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