Does happiness come with a price? According to a significant portion of Americans, it does, and the cost is far from modest. A recent survey by Empower, a financial services firm, has shed light on the financial benchmarks Americans believe they need to hit to find happiness. The figures are eye-opening, revealing a gap between reality and aspiration that stretches wider than many might have imagined.
While the annual median household income in the U.S. hovers around $75,000, respondents to the Empower poll painted a different picture of financial contentment, estimating the golden number for annual earnings at $284,000. But it doesn’t stop there. To truly feel the warmth of financial happiness, Americans say they need $1.2 million sitting in the bank. This aspiration stands in stark contrast to the 2022 median net worth of U.S. households, which the Federal Reserve pinned at $192,900.
These aspirations come at a time when Americans are feeling a financial squeeze, with 81% of survey participants citing money-related stress, largely fueled by persistent inflation and the impact of rising interest rates on their financial well-being. Despite this, the prospect of achieving these financial milestones seems distant, especially considering that the anticipated average raise for workers in 2024 is pegged at just 3.9%, according to Mercer, a consulting firm.
The survey highlighted generational differences in financial happiness thresholds. Most generations leaned towards a low six-figure income as the gateway to happiness, with millennials setting the bar significantly higher, envisioning happiness at an income exceeding half a million dollars annually. This ambitious outlook could be attributed to the economic hurdles millennials have faced, including the Great Recession and the challenges of securing a foothold in today’s housing market.
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Empower’s survey, conducted by The Harris Poll of over 2,000 American adults, underscores a broader conversation about money’s role in achieving happiness. The question of whether money can buy happiness is longstanding, with research on the topic offering varying conclusions.
Daniel Kahneman, a Nobel laureate in Economic Sciences, and Matthew Killingsworth, a researcher, have contributed significantly to understanding the relationship between income and happiness. Kahneman, known for his work in psychology and decision-making, found in 2010 that happiness increases with income up to a certain point ($75,000), after which it plateaus. Killingsworth, focusing on moment-to-moment well-being, discovered that happiness continues to rise with income beyond that point in his study, published in 2021.
Given the complex relationship between income and happiness, it might be wise to seek professional advice to navigate your financial journey. A financial adviser can help tailor a plan that not only aims for financial growth but also considers personal fulfillment, helping you reach your own unique goals.
*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.
Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.
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This article Average Person Believes Financial Happiness Comes With A $1.2 Million Price Tag, Revealing Money Can Buy Happiness originally appeared on Benzinga.com
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