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Kiplinger
Kiplinger
Business
Jacob Schroeder

Want to Be Happy? Here's How Much Money You Need

An older, happy couple walks their dog on a country road.

Did John D. Rockefeller know how to be happy? The Standard Oil empire made him one of the most successful and powerful business leaders in American history, bringing him immense wealth and influence. At one point, his fortune was estimated to be $1.4 billion — equivalent to 1.5% of U.S. GDP.

Despite his vast wealth, when asked how much money is enough, he famously replied, “Just a little bit more.”

Does that sound like a happy man? Or, be honest, does it sound like you? Whether you are just starting a career or planning for a happy retirement, getting a handle on how much is enough can save you time and angst.

According to a poll from financial services firm Empower, about 60% of Americans believe money can buy happiness. Yet, to achieve happiness through financial means, most say they’d need a significant raise and a hefty sum in the bank.

With the median household income in the U.S. at roughly $80,000 annually, respondents said they would need to earn about $284,000 a year to feel truly happy. As for wealth, Americans said they’d need $1.2 million.

The relationship between money and happiness has been debated for centuries. We’re often taught to believe money can’t buy happiness. However, the latest data suggests a little more could indeed help — but when it comes to living a happy life, it may take more than just money.

More money more happiness ... sort of

Like Rockefeller, many of us think we’ll finally be happy once we have more money or maybe a higher-status job. But is this a legitimate expectation or an unrealistic belief?

In 2010, Nobel laureate Daniel Kahneman and economist Angus Deaton found that day-to-day happiness rose with income but then plateaued at $75,000. However, in 2021, research by Matthew Killingsworth from the University of Pennsylvania showed a different picture — happiness continued to increase beyond $75,000 with no sign of a plateau.

So, does more money mean more happiness? The answer is more nuanced.

To address the conflicting findings, Kahneman and Killingsworth collaborated, with University of Pennsylvania professor Barbara Mellers serving as arbiter. Their study revealed that, on average, higher incomes are indeed linked to greater happiness. However, for a subset of unhappy individuals, happiness rose sharply with income up to $100,000, then leveled off. For others, happiness continued to rise, and for the happiest group, it even accelerated beyond $100,000.

As Killingsworth put it, “If you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.” 

Harvard professor and bestselling author Arthur Brooks builds on this idea, cautioning, “Those who chase wealth, despite having enough, never feel satisfied with what they have, and thus always want more. This leads to a dangerous loop of what scholars call the ‘hedonic treadmill’.”

This suggests happiness and income don’t have a simple, one-size-fits-all relationship. Mellers cautions against confusing correlation with causation. She says the degree to which money causes happiness is less significant than people often assume, noting “that relationship is weak, much weaker than most people realize.”

In short, money can help, but it’s just one piece of the happiness puzzle.

It’s not the size of your bank account that matters, but how you use it

One reason money may be linked to happiness is that it provides more control and choices, allowing people to focus on other things that truly bring joy.

Take relationships, for example. The Harvard Study of Adult Development – the longest-running study on happiness — found that, regardless of income, relationships matter most for well-being and life satisfaction.

Other research suggests that social activities, like volunteering and traveling, also promote happiness. Daily activities like exercise, meditation and practicing gratitude can significantly elevate happiness, too.

Money itself may not generate happiness, but how you use it might. For instance, Killingsworth’s research shows that experiences provide more immediate and lasting happiness than material purchases. Additionally, people tend to feel happier when spending money on others rather than themselves.

Given the significant role other factors play in well-being, viewing money as the solution to happiness may be misguided.

As Mellers points out: “Money can solve some problems, such as curing poverty, paying for medical treatments or educational opportunities, and fulfilling life dreams. But many problems cannot be solved with money, such as the pain of seeing loved ones suffer from incurable diseases or the grief of losing a family member.”

Brooks emphasizes this point: “The idea is that you should focus on having enough income to remove sources of unhappiness, but not focus on money itself to make you happier. The notion that a certain threshold of money will provide ultimate happiness is, ultimately, a fallacy.” 

The myth of a ‘happiness number’

We all strive to determine our personal “retirement number” — the wealth needed for a comfortable retirement.  But finding a similar “happiness number” seems to be a fool’s errand.

While happiness is personal, we can agree it starts above the poverty line, where financial hardship is linked to stress and anxiety. In the Empower survey, 67% of respondents said paying bills on time would increase their happiness, and more than half said being debt-free or affording luxuries would boost their mood.

But, if you are lacking in other areas that generate happiness — like relationships and purpose — more money won’t necessarily move the needle. Research shows that tying self-worth to money can actually lead to greater dissatisfaction.

Brooks elaborates, “If your primary goal is financial success — rather than getting happier — you’ll fall into the satisfaction trap. A much better alternative is reversing the order of operations and pursuing happiness via wealth creation. Pursue it to put your grandkids through college or to give your family a better life. You should pursue wealth in a spirit of love for your family and friends, not out of the envy of others.” 

This creates a delicate balance when considering career choices or prioritizing income over other life goals. A “happiness number” may not be a fixed target but something you continually work toward.

Brooks suggests we think of happiness as a direction, not a destination, and aim for “happierness” instead. By aligning your financial goals with core values and passions, money becomes a tool to support happiness rather than an end in itself.

Perhaps that’s what Rockefeller was missing when he also said, “I have made many millions, but they have brought me no happiness.” He was rich, but not in all the things that mattered.

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