The U.S. Census Bureau recently released a report that reveals a declining median income for American households: $74,580 in 2022, down slightly more than 2% from the forecast for the prior year.
But according to a recent Bankrate survey, Americans need approximately three times more to feel financially secure.
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Despite the fact that the average yearly wage for a full-time worker is little over $75,000, the survey claims that the average American feels they need to earn over $233,000 annually in order to be financially secure.
41% of respondents also cited a lack of retirement savings as a cause of their financial uncertainty. According to data from a 2023 Northwestern Mutual survey, Americans believe that $1.27 million is the magic amount they need to save in order to live comfortably in retirement, even if the average amount they have saved is only $89,300.
Harmonising your ambitious financial goals with the bottom line is no simple undertaking. There are three things you should do right away to create the nest egg you need to ensure your future, even if you don’t make as much money as you think you should.
You’ll find agreement on this topic among financial experts like Dave Ramsey and Suze Orman as well as your friendly neighbourhood financial adviser. High-interest unsecured debt is a wealth killer.
In addition to that, 26% of the respondents to the Bankrate study who identified a lack of financial stability as a result of “high or revolving debt” did so.
The total amount of credit card debt held by Americans has surpassed $1 trillion, making retirement even further out of reach for many.
Anything you can do to reduce your debt’s average annual percentage rate (APR), which has risen above 20%, would help you feel more at ease as you approach your retirement date.
While it may seem absurd that Americans would pass up free money, that is exactly what occurs when they join up but don’t contribute the maximum allowed amount or miss out on employer contribution matching to expand their retirement accounts.
One in ten working Americans don’t receive their full employer match, according to a recent survey by financial services platform Magnify Money, and 7% don’t even know if their business offers a plan at all.
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Even if your budget may be tight right now, contributing to your 401(k) now and having your company match it is a simple way to feel less worried about your financial future.
If you don’t have the money to travel there right away, ask your employer about the auto-escalation options that are available. By automatically increasing your annual contribution amount until you meet your goal, you can ensure that you make the most of all the funding that is available to you.
To put it simply, $233,000 won’t buy you nearly as much in New York City as it would in the Great Plains. Even while you might not want to leave New York City for the great outdoors, it can be worthwhile to consider moving — particularly if you have the option of working remotely.
You don’t always need to relocate to a small town to get cheaper options, according to research by Kiplinger. For instance, Topeka, Kansas has a cost of living that is 17.5% below average whereas St. Louis is 13.7% below the national average.
Although housing costs are still high nationwide, you can locate affordable housing in cities like the capitol of Kansas or Minneapolis, Minnesota. The Midwest city has received praise for being as the primary American city to control inflation.