The average American believes they need to earn $233,000 to feel financially secure.
But to feel rich or gain financial freedom, they believe they would need more than double that — about $483,000 a year, according to a new report from Bankrate.
Both numbers are well above the average annual income in the US, which is $75,203 according to the Census Bureau.
In the face of rampant inflation and an uncertain economy, around 72 percent of respondents said they did not feel safe when it came to money.
This comes after a study last month showed that Americans assumed they needed millions in the bank to be considered rich – when the average net worth of a person who felt “rich” was actually just $560,000. Dollar.
The average American believes they need to earn $233,000 to feel financially secure
The study found that women say they need a little more than men to feel financially secure — and wealthy
According to Bankrate, among the 2,000 Americans surveyed, it was the economy that was keeping households from feeling financially secure.
About 63 percent pointed to the high inflation and 36 percent of those surveyed blamed rising interest rates.
Although the Federal Reserve took a pause in interest rate hikes in June for the first time in 15 months, the ten previous hikes in a row have already taken their toll on consumers as mortgage rates have soared.
Inflation also slowed to an annual rate of 4 percent in June, but basic necessities like food and vehicles remain stubbornly high.
“Structural or long-term changes have affected Americans’ ability to manage their personal finances,” said Mark Hamrick, senior economic analyst at Bankrate.
“Where there was a time in the United States when a married couple with children could get by with a sole breadwinner in the home, those days are largely gone.”
The study found that women say they need a little more than men to feel financially secure — and wealthy.
Women say they need to earn $502,400 a year to feel rich, while men say they need $465,300 — about 8 percent less.
To feel comfortable, women believe they need an average salary of $237,400 while men earn $229,100.
This comes after investment firm Charles Schwab’s Modern Wealth Survey last month showed that Americans believe the magic number for feeling wealthy is $2.2 million — but the real answer is much lower , leading to a “paradox” in how households view their finances.
The average net worth of workers in each generation who said they felt “wealthy.”
The average net worth of a person who actually “felt” rich was $560,000.
The data showed that of all generations, millennials were the most likely to feel rich.
About 57 percent of people in this cohort — between the ages of 26 and 41 — said they felt wealthy. The average net worth of a millennial who felt wealthy was $531,000.
Meanwhile, 46 percent of Gen Z respondents aged 21-25 said they felt wealthy, with an average net worth of $414,000.
Around 41 percent of Generation Xers — those between the ages of 42 and 57 — said they felt wealthy. On average, those in this cohort who felt wealthy had $410,000 at their disposal.
Only 40 percent of Boomers — aged 58 to 75 — said they felt wealthy. But their wealth threshold was higher than any other cohort — averaging $692,000.
When Charles Schwab conducted the study in 2021, it found that Americans thought $1.9 million was enough money to feel good.
However, with skyrocketing inflation and the rising cost of living, that number shot up to $2.2 million in 2022 — and stayed there this year.
Rob Williams, managing director of financial planning and wealth management at Charles Schwab, told Bloomberg, “There’s this paradox that people define wealth differently for themselves than for others.”
“If you ask someone for a dollar amount, they don’t put it in the context of the rest of their life and financial health.”
The Bankrate study also found that insufficient retirement funds are one reason Americans feel insecure about their finances — 41 percent cited it as a top concern.
This is perhaps not surprising given the troubling gap between what Americans need for a comfortable retirement and the amount they have in savings.
A study by Northwestern Mutual last month found that, on average, people believe they should set aside $1.27 million for retirement. Still, they typically saved just $89,300 — a mere 7 percent of their goal.
Almost half of those surveyed — around 48 percent — said they didn’t think they had enough money saved for the future they want, according to the results.
Overall, the average American now believes they must work until age 65 to be ready for retirement, up from 64 last year.