A new report by the U.S. Census Bureau shows a shrinking median income for U.S. households: $74,580 in 2022, down just over 2% from the previous year’s estimate.
But a recent Bankrate survey shows Americans want about three times that to be in their financial comfort zone.
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The survey says the average American feels they need to earn roughly $233,000 a year to be financially secure, despite the fact that the average yearly income for a full-time worker is just over $75,000.
Close to half of respondents (41%) also named lack of retirement funds as a reason for financial insecurity. That jibes with figures from a 2023 Northwestern Mutual study in which Americans named $1.27 million as their magic number to retire comfortably – even though the average amount saved is just $89,300.
It’s no easy task to create harmony between your ambitious money goals and bottom-line numbers. Even if you don’t make as much as you think you need to, there are three things you should do now to build the nest egg you need to secure your future.
1. Get rid of high-interest debt
From money mavens like Dave Ramsey and Suze Orman to your friendly neighborhood financial adviser, you’ll find unanimity on this point: High-interest unsecured debt is a wealth killer.
Further to that point, 1 in 4 respondents to the Bankrate survey (26%) cited “high or revolving debt” as a reason why they lacked financial security.
Americans’ total credit card debt is now more than $1 trillion, pushing the retirement goal line even further away for many.
With average APRs soaring above 20%, anything you can do to pay off that debt faster will help give you peace of mind as you get closer that retirement date.
2. Maximize your 401(k) contributions
While it seems silly that Americans would ignore free money, that’s exactly what happens when they fail to take advantage of employer contribution matching to grow their retirement accounts, or sign up but don’t take hit the maximum available amount.
A recent survey from financial services platform Magnify Money found that one in 10 working Americans miss out on their full employer match – while 7% say they don’t know if their employer offers a plan in the first place.