Americans remained primarily positive regarding financial contentment despite the recent economic challenges, like rising costs and student loans.
According to a recent study conducted by Empower, a US-based financial services company, many Americans believe that money can buy happiness, and the price tag for financial bliss is $1.2 million.
Based on responses from 2,034 adults in the United States, the study revealed that a significant majority, 59%, affirm that wealth is intricately linked to happiness.
Exploring the Link Between Money and Happiness
For centuries, the question of whether money can buy happiness has lingered in the collective consciousness. Empower’s new research explores the state of joy in life and work, seeking to find out what it really takes to be financially happy.
The research found that being financially stable can make many Americans happy and satisfied with Millennials leading the charge among those who believe that money can buy happiness. According to the report, 72% of Millennials assert that money is a gateway to happiness, closely followed by 67% of Gen Z and 58% of Gen X.
Millennials said they would need a net worth of $1,699,571 to be financially happy, while Gen Z and Boomers only need $999,945 and $487,711 to stay satisfied. Gender nuances further color the financial landscape, with men declaring a net worth target of $1,488,327—nearly double the amount voiced by women at $880,950.
According to the report, the substantial financial gap between millennials, Gen Z, and Boomers can be attributed to several challenges millennials have had to weather, ranging from the 2008 financial crisis to the 2020 pandemic-induced volatility and current economic headwind.
More than Just Dollars and Cents
When asked about the first word that comes to mind in association with financial happiness, respondents overwhelmingly mentioned freedom, followed by security and relief. Interestingly, the study indicates that the average American believes achieving financial happiness requires accumulating $1.2 million.
However, the research sheds light on a nuanced reality – incremental financial wins, rather than a colossal net worth, significantly impact individuals’ well-being. While a substantial 71% believe that more money could solve most of their problems, the study found that attainable gains of $15,000, $25,000, and even $5,000 can trigger meaningful boosts in financial happiness for a considerable portion of respondents. Addressing key financial milestones, such as timely bill payments, living debt-free, and affording everyday luxuries, is crucial for enhancing contentment.
“Though 7 in 10 (71%) believe more money would solve most of their problems, for a third (32% overall, and 37% of Boomers), a relatively attainable gain of $15,000 would make a meaningful impact in their lives, boosting Americans’ feeling of financial happiness for six months. That number surges to 42% with a $25,000 gain (50% of Boomers), and just $5,000 would do it for 17%,” Empower said in its report.
Retirement and Financial Contentment
According to the Empower report, an average American expects to retire three years later than expected at around age 63 due to financial constraints. For those without a financial plan, the delay stretches to five years. On the flip side, Gen Z had different ideas, aiming to retire at 54 adjusting their plans from age 49 just a year ago.
Digging deeper, the report found that future generations may be unable to count on inheritance to boost their savings, as 67% of respondents value taking care of themselves now more than leaving an inheritance. This feeling was even stronger among Boomers, with 75% choosing to care for themselves now rather than leaving an inheritance.
Americans remained primarily positive regarding financial contentment despite the recent economic challenges, like rising costs and student loans. While 3 in 4 respondents, approximately 68%- said they were content and more satisfied at work, 72% disclosed they were more content in relationships, and 58% felt very satisfied with their overall wealth.
According to the report, the disparity in contentment can be attributed to some respondents 67% feeling their income was not keeping up with inflation, and 42% believing their standard of living was going down.
With financial pressures all around, like rising costs (81%), interest rates (66%), and student loans (32%), over half of the surveyed Americans admitted to carrying debt (54% and 72% of Gen X). Additionally, 36% said they could not handle a surprise expense over $500 without getting worried.
