Americans Say $516K Needed to Achieve Financial Wellness

A recent survey found that Americans, on average, believe that it takes $ 516,000 in savings to achieve financial well-being.

The key to financial wellbeing can be a cool half a million. Although the factors that determine financial stability can be different for every investor and retirement saver, a recent survey by Empower Retirement and Personal Capital found that most Americans believe it takes more than $ 500,000 in savings to get financially healthy. Conducted by The Harris Poll, the survey interviewed 2,005 people from different ages, races and ethnic backgrounds, stages of life and employment sectors to find out their views on financial wellbeing.

$ 516K: The Magic Number for Financial Wellbeing?

The survey found that Americans’ attitudes toward financial wellbeing evolve as they move through different stages of life or when they experience significant “perspective shifting events.” However, according to the survey, Americans believe that the average amount of money needed to achieve financial well-being is $ 516,433.

The survey found that Americans don’t feel financially healthy until they are 47 years old. Additionally, they said that by age 49, they believe other people are feeling financially healthy.

“While many Americans believe financial well-being is achievable, less than half say they are financially healthy today,” the survey said.

From Broke College degrees to half a million by the age of 47

A recent study found that Americans, on average, believe they need to save over $ 500,000 to achieve financial well-being.

A recent study found that Americans, on average, believe they need to save over $ 500,000 to achieve financial well-being.

How does someone actually save $ 500,000 after starting with next to nothing? Imagine a 22 year old college graduate named Nicole. Although she graduated with minimal debt, she starts investing with just $ 100. Using SmartAsset’s Investment Calculator, she was able to determine exactly how much to invest each year to meet her goal of saving over $ 500,000 by age 47.

With an annual return of 8%, Nicole has to invest $ 7,050 per year to have over $ 516,000 in 25 years. That means she has to set aside $ 587 for investments every month. Nicole’s ability to save this amount is of course dependent on a number of factors including her income, expenses, budget, and the cost of living in her area.

The story goes on

Save $ 500,000 despite a later start

Of course, not everyone can start investing right out of college. According to EducationData.org, tens of millions of Americans are riddled with student loan debt and owe a total of $ 1.73 trillion. Even if a college graduate can only start investing once his or her loans have been repaid, at the age of 47 he can still achieve what felt like financial well-being by placing more emphasis on his savings rate.

Derrick, a 30-year-old college graduate who just paid off his student loans, has less time to invest than Nicole, so he has to invest more money every year. Starting with just $ 100 and an average return of 8%, Derrick has to invest $ 15,300 or $ 1,275 per month each year to save more than $ 516,000 by the age of 47. Again, this may be easier said than done, depending on Derrick’s expenses and income potential.

A recent study found that Americans, on average, believe they need to save over $ 500,000 to be financially healthy.

A recent study found that Americans, on average, believe they need to save over $ 500,000 to be financially healthy.

Barriers to achieving financial health

For many Americans, saving and investing thousands of dollars a year can be daunting. The Empower Retirement and Personal Capital survey found that nearly 7 in 10 Americans face at least one obstacle in their financial lives, while the average person faces at least two obstacles.

Around 27% of respondents to the survey said not getting paid enough is the main obstacle they face, while another 23% said spending too much is the main obstacle they face. All in all, 19% of people said they are “not in a place to save”.

But the Americans are ready to help. Almost 80% of respondents said they needed help optimizing their financial wellbeing, which underscores the need for financial advisors. Of these people, 32% said they might need help paying off debt, while 30% said they need help building an emergency fund. The survey found that 28% of respondents said they needed help with their investment strategy.

Bottom line

What financial health means to you is likely to be different from the next person. But Americans, on average, think it takes more than $ 516,000 to get financially healthy. This savings goal can be achieved by investing early and frequently. While a number of obstacles can prevent ordinary Americans from achieving financial wellbeing, creating a plan and following that plan can help them succeed in investing. Expert financial advice can also help investors create a successful game plan.

Financial wellness tips

  • Get expert financial advice. According to the Empower Retirement and Personal Capital survey, 78% of Americans said they needed help optimizing their financial wellbeing. A financial advisor can help you create a plan to meet your financial goals, whether it be saving $ 500,000, saving for college, or buying a home. SmartAsset’s matching tool can pair you with up to three local consultants in just five minutes. If you’re ready to find an advisor, get started now.

  • Start by asking yourself basic questions. Are you sticking to a budget? If not, create one using SmartAsset’s budget calculator. Do you have an adequate emergency fund? Experts recommend saving between three and six months in expenses. Are you on track to retire anytime you want? If you’re not sure, take a look at our retirement calculator to see your progress.

Photo credits: © iStock / roberthyrons, © iStock / kate_sept2004, © iStock / Petar Chernaev

“Americans Say it Takes $ 516,000 to Achieve Financial Wellbeing” first appeared on the SmartAsset blog.

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