In an era marked by economic instability and rising living costs, the perception of financial security varies significantly among different generations in the United States. According to recent data from Bankrate, the amount of money Americans believe they need to feel financially secure or wealthy differs widely across age groups, reflecting their varied economic experiences and expectations.
Despite these financial targets, a significant number of Americans across all generations feel they are far from achieving them. Bankrate's annual Financial Freedom Survey reveals that only 6% of Americans who have a clear idea of the income needed to feel secure are currently earning that amount. About 37% believe they might one day reach their desired income, while 31% think it's unlikely, and 18% feel they will never attain that level of income in their lifetime. The median income in the United States is around $75,000, which is less than one-sixth of the desired sum by each generation.
Baby Boomers
The Baby Boomer generation, aged 60 to 78, indicate that they would need to earn upwards of $556,000 to feel wealthy and financially comfortable. This generation faces high healthcare costs and the need for substantial retirement funds, contributing to their higher financial threshold. Having lived through several periods of financial instability and economic change, Baby Boomers require a higher level of financial comfort. Notably, they are the least financially optimistic of the groups surveyed, with 42% believing they will never achieve financial security.
Generation X
Generation X, comprising adults between the ages of 44 and 59, claim that they need upwards of $574,000 to feel rich. Often referred to as the "sandwich generation," they balance the financial demands of raising children and supporting ageing parents. With rising costs of education, healthcare, and housing, Gen Xers aim for a higher income to secure their financial future and provide for their families. Gen X's financial optimism also correlates with their perceived needs, with only 15% feeling financially secure.
Millennials
Millennials, currently prominent in the workforce, have a lower desired sum to feel financially comfortable, estimating their baseline at around $480,000. Despite facing significant challenges such as student loan debt and escalating living costs, Millennials benefit from the gig economy and multiple income streams. These factors contribute to their relatively lower financial threshold compared to older generations. However, Millennials remain uncertain about their financial future, with only 50% feeling hopeful about achieving financial security.
Generation Z
Generation Z, the youngest and most recent generation to enter the economy, state that they need $461,000 to feel rich, which is less than half a million dollars. Having grown up during economic downturns and witnessing the financial struggles of previous generations, Gen Z focuses more on financial stability and flexibility. Their lower financial target reflects a cautious approach to money management and an emphasis on experiences over material wealth. Gen Z is also the most optimistic of the groups surveyed, with 63% believing they will eventually achieve financial security.
The Rising Cost of Living
Americans report needing a six-figure salary just to live comfortably, which is more than double the average full-time worker's earnings of about $79,000. Prices have risen nearly 21% since the pandemic, necessitating an extra $210 for every $1,000 spent on typical consumer goods and services. Additionally, the cost of housing and education has soared, with many Americans now needing a six-figure salary to afford a home in almost half of the U.S. states.
Financial perceptions also vary by region, race, and gender. For instance, Black Americans report needing significantly more income to feel secure compared to their White and Hispanic counterparts. Men generally believe they need to earn more than women to feel financially secure, but women are more likely to think they will never achieve their financial goals. The overarching concern across all generations and groups in the United States remains one of financial insecurity, exacerbated by rising costs and economic challenges.
