According to a new Bankrate survey, Americans have a specific dollar figure in mind for what it would take to be financially secure. That magic number? $186,000 in annual income.
Currently, only 6 percent of American adults make that amount or more, Bankrate said. The median household income is between $51,500 and $86,000, according to the latest federal data.
Achieving a sense of financial security means paying all the bills, as well as buying some wants, while still having enough left over to save for the future, the personal finance site said. However, many inflation-weary consumers are experiencing increased financial stress, with a new survey from the Federal Reserve Bank of Philadelphia finding that 35% of Americans are worried about making it to the end of month, compared to 29% the previous year.
This gap between what the typical American makes now and what they aspire to earn means that “Americans have their eyes set on those high incomes and think they need to make more money even though they know it's unrealistic that they ever will.” that amount,” Bankrate analyst Sarah Foster told CBS MoneyWatch.
Earning more remains at the top of many Americans' priorities as the price of housing, food and health care remain stubbornly high after two years of rising inflation. To do so, consumers are cutting back on spending on dining out, entertainment and travel, a TransUnion study found.
Bankrate's survey of 2,400 Americans in mid-May found that younger generations are more optimistic about earning enough to live comfortably.
What does it take to be rich?
Americans have an even higher standard for feeling rich. The survey found they believe they would need to earn $520,000 a year to qualify as wealthy, up from their response of $483,000 during the same survey last year.
The rising cost of consumer goods is one of the main reasons for the increase, Foster said. “Inflation is the centerpiece of this narrative,” Foster said. “Americans know where the bar is for living comfortably, but every time they get there, the cost of living goes up and the bar gets farther and farther away.”
Another recent report found that adults in major US cities need it earn $96,500 annually before taxes to meet basic needs and save, while a two-parent household with two children needs a combined $235,000 to live comfortably.
curiously, Research 2023 by the late Nobel Prize-winning economist Daniel Kahneman and his colleagues suggest that happiness increases with income, up to about $500,000, roughly the income Americans told Bankrate would make them feel wealthy.
