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The threshold for living comfortably has gotten much higher in many Americans’ minds.
Americans believe they would need to earn $186,000 per year to feel financially secure or comfortable — more than double what the average full-time, year-round worker made in 2022, according to a Bankrate survey published Monday. This figure has fallen 20% from last year, when respondents said they needed $233,000 to feel secure.
“Life always seems like it’d be better with just a little bit more money to spare. That’s even more true when the items Americans both need and want have been climbing in price,” said Bankrate analyst Sarah Foster. “In the four years since the pandemic, comfort is no longer a commodity but a financial privilege, appearing to only be afforded to those wealthy enough to ‘eat’ the impact of inflation.”
The current U.S. inflation rate is 3.3%, a considerable slowdown from a historic peak two years ago. But many are still burdened by higher prices, as everything from food to housing has gotten more expensive across the board. Prices have risen more than 20% since February 2020, at the onset of the COVID-19 pandemic, according to Bankrate analysis of federal data. This pace of inflation means Americans would need about $1,200 to buy the same goods and services that cost $1,000 four years ago. In that same timeframe, just 6% of the nearly 400 items the Bureau of Labor Statistics tracks are cheaper today.
Inflation and economic uncertainty have posed a significant stressor for Gen Z, many of whom entered the job market during or around the pandemic. Of all the generations, they reported needing the highest income, on average, to feel financially secure. Baby boomers cited needing the lowest income to feel comfortably, but were still well above the $100,000 threshold,
Going beyond comfort, Americans said they would need to earn an average of about $520,000 to feel rich or completely financially free. Households with an annual income of more than $500,000 are considered to be within the top 1% of earners in the country.
YouGov Plc surveyed 2,407 U.S. adults for Bankrate between May 16 and 20.
Who’s actually feeling secure?
Among those surveyed by Bankrate who said they had an idea of what they would need to earn to feel financially secure, only 6% said they already make enough. Just 37% said they are likely to make that salary in their lifetime.
Meanwhile, nearly one-third said they are unlikely to earn an income high enough to be comfortable. And nearly 1-in-5 think they will never make that much.
Younger generations are more optimistic about the prospect of an income that provides financial security, while older generations are increasingly pessimistic.