Money may not be able to directly buy happiness, but it can certainly help.
That’s according to a new poll of nearly 2,000 people from financial services company Empower in conjunction with The Harris Poll, which found that Americans believe they need to earn just over $284,000 a year to be happy. Currently, the average family in the United States earns about $74,580; Empower survey participants earned an average salary of $65,000.
The real number needed to be happier may be lower than that: Estimates of what is needed are all relatively similar across generations — ranging from $124,000 to $130,000 for Gen Z, Gen To $525,000, which raises the average. Empower attributes the large discrepancy to “significant headwinds experienced by millennials, including the 2008 financial crisis when many were entering the job market, volatility caused by the pandemic, and currently some of the highest inflation and mortgage rates in decades.”
In fact, the generation has faced one financial setback after another, including those identified by Empower, as well as far more student loan debt than previous generations. An Empower spokesperson also pointed to deteriorating retirement plans and Social Security issues that greatly impact millennials. In addition, the pandemic and record high interest rates also occur during years of prime wealth accumulation.
While the jump from median income to $284,000 may seem big, there are differences, too. “For many, the extra gains could do wonders: $25,000 would increase 42% of Americans’ financial happiness for six months,” Empower wrote. For an additional third of people $15,000 will do the trick, while 17% would be happier if they received just $5,000.
However, most people surveyed said an average income of $95,000 would make them happy and less stressed. The highest earners, with an average income of $250,000, said $350,000 would do the trick.
That those who earn the most would need the biggest raises to feel happy is not surprising; It is consistent with previous research. For example, the idea that happiness amounts to a $75,000 annual salary is an oft-cited statistic that has been shown to be flawed, and it doesn’t take a scientific study to find out why. Inflation, high interest rates, and student loan debt were just some of the stressors cited by people in the Empower survey. In fact, more than 70% said the company getting more money would solve most of their problems.
The secret to financial happiness
Empowerment does not define happiness, or what happiness means. But survey respondents told the company it’s a lot about the simple things: being able to pay bills on time, being debt-free, and being able to enjoy small luxuries, like a cup of coffee, without worry. Many people associate happiness with having a plan and being independent, and about 60% of Americans believe that money can actually buy them peace of mind.
There are some other generational differences when it comes to money. While 44% of Americans overall associate happiness with having a good work-life balance, 55% of Millennials and 58% of Gen Z do, which isn’t a surprise to those who have paid attention to work trends like so-called quiet withdrawal. Life over the past few years.
However, it stands to reason that millennials have a skewed sense of how much money they need to be happy: 45% of survey respondents told Empower that owning a home is just as important to their financial well-being as having a good work life. balance. Although they are catching up somewhat in middle age, Millennials are notoriously disadvantaged in the housing market — and with interest rates still much higher than they have been in the past few years and prices around all-time highs, it’s becoming increasingly difficult to Increased for first time buyers to break into the current market. “Owning a home has proven elusive, with fewer Millennials owning a place than previous generations, and is a major source of wealth creation for Generation X and Boomers,” an Empower spokesperson said. luck.
Only 17% of respondents said that reaching a certain net worth would bring them financial happiness. But if they had to put a number on it, it would be $1.2 million on average. Once again, millennials reported the highest net worth figure, nearly $1.7 million. Generation
That’s a far cry from America’s current median net worth of $192,900, according to the US Federal Reserve’s Survey of Consumer Finances (the median, skewed by wealthier Americans, is more than $1 million).
