AVERAGE AMERICAN SAYS THEY NEED TO EARN $230K TO FEEL ‘SUCCESSFUL’ — HERE’S WHAT EXPERTS SAY
According to a recent survey from Quickbooks, the average American believes when it comes to their personal finances, they will need to earn $230,000 in 2024 to feel “successful.” At GOBankingRates, we asked experts whether this amount is realistic or if there is a different amount that people should strive for to feel financially secure. Here is what they had to say.
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How Much Do Americans Say They Need to Earn in 2024 To Feel Successful?
When surveyed, adults said they would need to earn $230,000 on average to feel successful in 2024. As reported by Quickbooks, this is around three times the median household income in the U.S. That means this aspirational six-figure income is substantially higher than most people make.
Surprisingly, 11% of respondents said they would feel successful earning just $25,000 for the year. Additionally, over 40% of those surveyed felt that they would be doing all right if they made $75,000.
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Does the Amount Differ by Generation?
The amount it would take for someone to feel successful this year differed significantly by generation. For instance, the Quickbooks survey found that millennials believed it would take $288,000 on average to make them happy this year. However, 39% of the generation felt they could be content earning between $50,000 and $100,000.
Baby boomers were less concerned with earning large amounts of money. A whopping 42% of Boomers responded that they would feel successful earning between $25,000 and $50,000 in 2024.
How Much Do Experts Believe You Need To Be Successful?
David Blain, chartered financial analyst (CFA) and founder of BlueSky Wealth Advisors, said, “The perceived need for a $230,000 income to feel ‘successful’ in America captures a broad sentiment but lacks context tailored to individual financial situations. In my experience as the CEO of BlueSky Wealth Advisors, true financial success is measured by how well your income and savings align with your life goals and aspirations, rather than hitting a generalized target.”
Factors That May Influence This Amount
“From analyzing financial data across various demographics, the ‘right’ amount varies significantly,” Blain said. “For instance, retirement planning, which I’ve written extensively on, shows that the amount needed depends heavily on the lifestyle one aspires to maintain.”
“The discussions within ‘Will Your Golden Years Be Golden?’ emphasize a comprehensive approach, including understanding your retirement goals, estimating future expenses and strategizing around taxes,” he said, “all of which could influence the required savings considerably.”
Blain said, “Moreover, the notion of needing a specific annual income to feel successful can be misleading without considering net worth and liquidity. For example, during consultations, we often find that individuals who have lesser annual incomes but have managed their investments and assets wisely (reflecting insights from our blog on U.S. Household Net Worth) have a higher net personal wealth and are better positioned for a comfortable retirement than some higher earners.”
What Is Financial Success?
“In my four decades of experience as a CPA, dealing intensively with estate and individual tax planning, I’ve observed that financial ‘success’ and the notion of a ‘comfortable’ retirement have diverse meanings for different people and these perceptions are heavily influenced by their financial strategies and life circumstances,” said John F. Pace, certified public accountant (CPA) at Pace & Associates, CPAs.
He said, “Regarding the question of needing $230,000 annually to feel successful, it’s important to understand that this number is a psychological and social benchmark more than an economic one. The real focus should be on effective financial planning tailored to individual goals and conditions.”
Why Financial Planning Is Critical
“During my tenure as a family office executive for a Forbes 400 family,” Pace said, “I saw how strategic tax planning and investment could create vast differences in personal wealth accumulation and maintenance, independent of annual income figures.”
He said, “For example, careful structuring of investments and trusts can potentially yield significant tax advantages and long-term financial security, often more so than simply increasing one’s income.”
What Financial Planning Entails
“Planning for retirement or establishing what one needs to feel ‘successful’ financially should incorporate comprehensive approaches such as estate planning, risk assessment and proactive tax strategies,” Pace said.
“To give an example, understanding the implications of estate taxes and using vehicles like trusts can protect assets better than aiming for a high income alone,” he said. “Tools like these not only prepare individuals for retirement but also secure a financial legacy that aligns with their vision of success, which can be vastly different from the societal benchmark of $230,000.”
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This article originally appeared on GOBankingRates.com: Average American Says They Need To Earn $230K To Feel ‘Successful’ — Here’s What Experts Say
2024-05-07T17:34:58Z dg43tfdfdgfd
