(BPT) – How much money would make you happy? According to the average American, the price tag comes in around $1.2 million.
New research from Empower, a leader in financial planning, investing and advice, reveals 6 in 10 Americans believe money can buy happiness, though just 17% say financial contentment is about reaching a certain net worth. It turns out that a little goes a long way and incremental financial wins can make a massive impact on Americans’ well-being.
“Every generation has grappled with questions of how to calculate financial happiness: hard work, a lot of planning, consistent savings, and even a little bit of luck, in just the right measures,” says Carol Waddell, president of Empower Personal Wealth. “A spirit of financial confidence prevails, with 7 in 10 saying they have clear financial goals and Americans continue to envision a bright future.”
The financials of happiness
While the study found that 7 in 10 Americans (71%) believe more money would solve most of their problems, for a third (32%) a relatively attainable gain of $15,000 would make a meaningful impact in their lives, boosting their feeling of financial happiness for six months. That number surges to 42% with a $25,000 gain, and just $5,000 would do it for 17%.
Indeed, happiness manifests in big and small ways. The majority of Americans say it’s on-time bill payment (67%) and living debt-free (65%), while roughly half say it’s the ability to afford small luxuries without guilt (54%) and home ownership (45%). Over half say their contentment can be found in spending on experiences with those they cherish (53%) and in optimism for what’s next, including retiring on their own terms (37%).
Readying for retirement
Nearly three-quarters of Americans (73%) say they’re currently experiencing financial stress, with today’s economic pressures like inflation (81%), rising interest rates (66%) and student loans (32%) dampening their sense of prosperity. Half report carrying debt (54% overall, and 72% of Gen X) and nearly 4 in 10 (36%) say that they couldn’t handle an unforeseen expense over $500 without real worry.
In the current financial environment, Americans now expect to retire three years later, at age 63. Those with a less detailed financial plan (or no plan at all) don’t expect to clock out until age 70, five years later than planned.
For about 4 in 10 Americans (37%), and exactly half of Gen Xers, retiring by a certain age is the meaning of financial happiness. The majority (84%) are taking steps to reach this target, including putting more money into retirement savings (39%), short-term savings like a high-yield account (31%), and working with a financial advisor (26%). A quarter of savers (25%) are paying off debt more aggressively than they would otherwise and 22% are delaying a major purchase like a car.
The power of planning
The majority of Americans (73%) say a solid financial plan would bring them happiness, and they would like help to get there: 57% of Americans wish they would have gotten advice sooner. Nearly half of Americans (45%) say they haven’t gotten the financial advice they need, including 55% of Gen Zers and 57% of Millennials. But those who already have a plan are proof of its power: Americans with a more detailed financial plan are three times as likely as those with a less detailed plan to report greater happiness around financial freedom (75% versus 24%), their plans to achieve financial goals (78% versus 23%), and the overall state of their finances, such as their net worth and debt balances (73% versus 19%).
“The financial professionals at Empower combine the power of advice with technology to help Americans get on the path to financial freedom,” explains Waddell. “With their financial goals in mind and a solid plan to reach them, savers can spend more time doing the things that make them happy – in their working years and beyond.”
Access the full Financial Happiness report on The Currency™.
Methodology:
“Financial Happiness” survey of 2,034 Americans ages 18+ commissioned by Empower and fielded by The Harris Poll from August 7 to August 14, 2023.
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