A recent study by Edelman Financial Engines reveals that nearly 60% of Americans believe an annual income of $100,000 would ease their anxiety about day-to-day expenses. The sentiment is even stronger among those in their 30s and 40s, with 71% and 75% respectively citing $100,000 as the required income to alleviate their financial stress. The study, titled “Everyday Wealth in America,” surveyed 3,000 Americans aged 30 years or older, including 1,500 “affluent” individuals aged 45-70, between June 12 and July 3.
The findings provide a snapshot of American financial anxieties amid persistent high inflation and rising living costs. Edelman Financial Engines also reported that for one-fourth of all Americans, an income of $200,000 was necessary to banish stress about everyday expenses. In August, the Consumer Price Index increased by 0.2% month-over-month and 2.5% year-over-year.
This marks the smallest 12-month increase since February 2021. Despite this, the costs of food and shelter have continued to be significant pain points for U.S. consumers, with food prices up 2.1% and shelter costs up 5.2% compared to the previous year. The study also highlighted that only 12% of Americans view themselves as wealthy.
Income needed to ease anxiety
Furthermore, nearly two-thirds of those not identifying as wealthy indicated that having $1 million would change their perception. Around 44% of Americans view credit card debt as the biggest threat to their ability to build wealth.
Amin Dabit from Edelman Financial Engines stated, “Americans aren’t feeling overly confident about the state of their finances. Part of these worries stems from external pressures, like inflation, while some are individual pressures, such as family responsibilities and mounting credit card debt.
The survey also identified building emergency savings, growing wealth, and saving for retirement as the top three financial goals for Americans this year. Overall, the economy and personal finances were major drivers of anxiety, with 49% calling the economy their “biggest source” of stress and 48% citing personal finances.
Politics was also a significant source of anxiety for 37% of respondents. As Americans navigate these financial challenges, the insights provided by studies such as Edelman Financial Engines’ offer valuable perspectives on the state of financial well-being in the nation. The sharp rise in the cost of living during the pandemic has likely changed Americans’ views about the income required to stop worrying about paying the bills.
Isabel Barrow, director of financial planning, noted that a six-figure income is now viewed more as the basis for financial stability than a sign of wealth or achievement. She advised against letting politics and emotions influence financial decisions, as changing investment strategies based on future events can lead to missed opportunities.
