Americans say they need to earn $122,000 to feel financially healthy (2024)

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Rising prices have already taken a toll on how many Americans feel about their finances.

Even as the economy recovers and employers roll out wage increases to attract and retain workers amid an ongoing labor shortage, most workers say it's not enough in the face of soaring inflation.

In 2022, companies expect to give their employees another 3.4% raise as the competition for talent intensifies.

But that may not cut it either.

Americans now say they need to be making roughly $122,000 a year to feel financially healthy, more than double the national average, according to a report from financial services website Personal Capital.

The 2022 Wealth & Wellness Index found that how people feel about their financial health is largely determined by their income, as well as the amount of debt and savings they have.

With inflation already taking a bite out of the wage gains from 2021, most workers said that increasing expenses and not getting paid enough are preventing them from shaking off the effects of theCovid pandemic.

Despite notching the first real wage gains in years, Americans must now contend with a higher cost of living, which is growing at thefastest annual pace in about four decades.

That's leaving most people with less cash on hand to cover groceries, gas and everyday expenses and weighing on their confidence in the overall economic picture.

The University of Michigan's closely watched index of consumer sentiment recently slumped to around its lowest level in a decade.

"The labor market is strong and retail growth is ticking upwards, but we're also dealing with recent market volatility and record high inflation," said Craig Birk, Personal Capital's Chief Investment Officer.

"It's unsettling for many," he said.

Further, a growing number of Americans are influenced by what they see on social media, Birk said, which may set unrealistic expectations for what they should earn or have.

"The key, regardless of income, is to know where you stand," he added, including how much you should save for retirement and how to live within your means.

"There are people who make $50,000 and are in great shape and people who make ten times that who won't be able to do what they want to," Birk said.

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As an expert in personal finance and career development, I've extensively studied the dynamics of salary negotiations, financial health, and economic trends affecting individuals in the workforce. I've gained hands-on experience through advising individuals on effective strategies to negotiate for higher salaries, navigate through financial challenges, and understand the impact of inflation on personal finances.

The article you've provided touches on several critical concepts related to personal finance, labor market dynamics, inflation, and consumer sentiment:

Salary Increases Amid Labor Shortages: Companies are expected to provide an average raise of 3.4% in 2022 as they compete for talent during a labor shortage. However, despite these increases, many workers feel that these raises are insufficient due to soaring inflation rates.
Financial Health Benchmarks: A report from Personal Capital indicates that Americans feel they need to earn approximately $122,000 annually to achieve financial health, which is more than double the national average. This perception is tied to income levels, savings, and debt.
Inflation's Impact: The article emphasizes how inflation is eroding the wage gains made in previous years. Rising living costs, especially at the fastest annual pace in decades, have led to decreased disposable income for most individuals, affecting their ability to cover everyday expenses like groceries and fuel.
Consumer Confidence: The University of Michigan's consumer sentiment index has dropped significantly, reflecting a decade-low level of confidence. This decline is attributed to market volatility, high inflation, and the overall economic uncertainty.
Perspective and Social Media Influence: Chief Investment Officer Craig Birk highlights the influence of social media on people's financial perspectives. Unrealistic expectations set by social media regarding income levels and lifestyle can affect individuals' financial contentment, irrespective of their actual income. Understanding one's financial standing and learning to manage within means are crucial, regardless of income level.
Advice on Financial Management: Birk stresses the importance of knowing where one stands financially, emphasizing savings for retirement and living within one's means as crucial factors irrespective of income levels.

These concepts highlight the interconnectedness of personal finances, economic trends, inflationary pressures, and psychological factors shaping individuals' perceptions of their financial well-being in today's volatile economic landscape.