An annual survey by consumer financial services firm Bankrate has found that three out of four Americans feel financially insecure.
The Bankrate Financial Freedom survey, conducted with YouGov, also found that within the 75 percent of Americans who feel financially insecure, 45 percent believe they will eventually achieve financial security while the remaining 30 percent feel they will never reach that level of financial comfort.
The report also noted a generational divide in perceptions of financial security. Older generations are feeling less financially secure compared to their younger counterparts. Specifically, 42 percent of baby boomers (aged 60 to 78) and 37 percent of Gen Xers (aged 44 to 59) believe they will never attain financial security, compared to 21 percent of millennials (aged 28 to 43) and 13 percent of Gen Z (aged 18 to 27). (Related: More than 60% of Americans are living paycheck-to-paycheck as rising inflation continues to squeeze their budgets.)
Younger generations are more likely to believe in their future financial security, with 64 percent of Gen Z, 53 percent of millennials, 48 percent of Gen Xers and 26 percent of baby boomers expressing hope that they will one day feel financially secure.
To achieve that "financial security," respondents believe they should earn an average annual income of $186,000. However, this figure is more than twice the $79,209 average income of a full-time worker in 2022 as per the Census Bureau.
In line with that, the report reveals that only six percent of respondents with specific income goals for financial security believe they are currently earning enough to meet it, while 37 percent think they will eventually reach the income level they need to feel secure, 31 percent consider it unlikely and 18 percent believe they will never achieve it in their lifetime. Among those earning more than $100,000 annually, 49 percent were optimistic about their future financial security, compared to just 34 percent of those making less than $50,000.
Furthermore, the respondents believe they needed an average income of $520,000 to feel rich and financially free, an eight percent increase from the previous year's $483,000. This increase is attributed to the impact of inflation, which has significantly raised the cost of living.
"Life always seems like it’d be better with just a little bit more money to spare," commented Bankrate analyst Sarah Foster on the report's findings. "That's even more true when the items Americans both need and want have been climbing in price. 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."
Americans stuck between rising prices and stagnating wages
Mark Hamrick, a Bankrate senior economic analyst, summarized the current situation of Americans based on the findings.
"Many Americans are stuck somewhere between continued sticker shock from elevated prices, a lack of income gains and a feeling that their hopes and dreams are out of touch with their financial capabilities," Hamrick said.
"We've gone from an environment where inflation was the focus and the impact of rising prices has resulted in an affordability crisis, which is now front and center. If prices continue to normalize and the job market remains stable, further progress can be clawed back on the affordability front."
But the Bureau of Labor Statistics has calculated a 21 percent rise in prices, with the United States Department of Agriculture reporting a 25 percent increase in food prices and government data showing a 41 percent rise in gas prices since 2020. Meaning, everyone needs an extra $210 for every $1,000 spent on typical consumer goods.
This increase, combined with stagnant income growth, has left many Americans feeling that their financial aspirations are out of reach. For instance, a six-figure salary is now required in almost half of U.S. states to afford a typical home, while college tuition prices have also soared.
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