What would you need to have achieved in life to feel like you’ve “made it”? A six-figure salary, a sports car in your driveway, and the job title of your dreams, perhaps? In reality, it’s much more simple (or rather, less materialistic) than that: new research shows that most Americans define “making it” as reaching financial independence.
In fact, 67% of the 2,000 adults in the U.S. surveyed by Empower financial services, described achieving that milestone as the most important marker of success—and the salary needed to get there is less than one might expect.
Changing times
Traditionally, finding a vocation you enjoyed (and that paid a decent wage), fleeing the nest to a home of your own, and settling down wasn’t just the American dream—it was the status quo, with the typical homebuyer in 1981 between 25 and 34 years old.
But young people today are at the mercy of soaring rental costs and heavy student debt—all while navigating a difficult job market.
Financial independence is arguably harder than ever before; in fact, over half of those surveyed said they still rely on their family and friends for financial support, especially for help paying their rent (62%), internet and streaming services (56%), and their phone bill (54%).
It’s why Americans have previously insisted that they’d need to earn a whopping $233,000 to live comfortably in today’s climate.
Perhaps surprisingly then, financial freedom comes at a much lower price point in the eyes of the average American, according to Empower—about $94,000 a year, is how much they said they’d need to earn to feel financially independent.
But that’s still about $20,000 more than themedian household incomeof $74,580.
How to achieve financial freedom
There are several ways people may consider themselves financially independent, according to the research. For some, it means being able to live off a passive income and kick your feet up, instead of setting a 7 a.m. alarm and heading into work every day.
But for most of those surveyed, financial freedom means not needing money from family and friends—essentially being able to forge a life away from the familial home.
Despite parents wishfully thinking that their offspring will get to that stage by 23 years old, 92% of the few financially independent adults surveyed admitted they only started to feel that way once they reached the age of 36.
“Reaching a certain net worth” and “starting to contribute to a 401(k)” were also popular definitions, but Empower’s financial expert Keith Jones advises that people should ignore how others define the term and instead decide what it looks like for you.
“No matter your age, financial independence starts with clarity,” Empower’s Jones said in the survey release. “Establishing clear financial goals provides both direction and purpose, motivating you to work towards a more secure and satisfying financial future.”
The top 10 signs you’ve financially “made it” in life
- Being financially independent/not relying on anyone else for money—44%
- Moving up in my career/getting promoted—39%
- Having a job I love—37%
- Making a certain amount of money—25%
- Not having to work at all—25%
- Being able to spend money without worrying—22%
- Being able to pay my bills on time—9%
- Buying luxury items I want—7%
- Being able to retire comfortably—7%
- Buying a home—6%
Source: Empower
FAQs
The cost of living comfortably: On average, Americans feel they'd need to earn over $186,000 to feel financially secure or comfortable, a 20 percent drop from 2023 but still more than two times what the average full-time, year-round worker earned in 2022 (about $79,000), according to Census Bureau data.
How much money do you need to be financially independent in the US? ›
It doesn't take an exorbitant salary, either. Americans say they'd need to earn about $94,000 a year on average to feel financially independent. That's about $20,000 more than the median household income of $74,580.
What is the annual income to be independent? ›
$94k is notably higher than the average earnings of full-time, year-round workers in 2021, which was $75,203, according to Census Bureau data. While $94,000 per year may be the perceived benchmark for financial comfort, the definition of financial independence can vary significantly from person to person.
What percentage of Americans are financially free? ›
SAN MATEO, Calif., Aug. 22, 2023 /PRNewswire/ -- Despite most Americans having modest expectations of what it means to attain financial freedom, just 1-in-10 (11%) report they are living their definition of financial freedom, according to a new survey by Achieve, the leader in digital personal finance.
How important is it for everyone to be financially independent? ›
Financial independence is extremely important for all of us these days. It empowers you with the ability to maintain and improve your lifestyle. You have the freedom to achieve materialistic goals in your life once you become financially secure.
Can I retire with 500k at 40? ›
As mentioned, $500,000 can last for over 30 years if budgeted correctly. However, there are a number of caveats to this, including how long you need your retirement savings to last you. For example, if you retire at 40 and need enough retirement savings for another 40 years, you may struggle.
At what point are you financially free? ›
Everyone defines financial freedom in terms of their own goals. For most people, it means having the financial cushion (savings, investments, and cash) to afford a certain lifestyle—plus a nest egg for retirement or the freedom to pursue any career without the need to earn a certain salary.
What salary is considered wealthy? ›
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.
What income is upper class? ›
While there's no definitive line, households in the top 20% of earners are generally considered upper class. According to the U.S. Census Bureau, the median household income in 2022 was $74,580. To reach the upper class in 2024, you'd typically need an income exceeding $153,000 – more than double the national median.
At what age are most Americans financially independent? ›
Among the key findings: 45% of young adults say they are completely financially independent from their parents. Among those in their early 30s, that share rises to 67%, compared with 44% of those ages 25 to 29 and 16% of those ages 18 to 24.
More than 1 in 3 workers (34 percent) say they are living paycheck to paycheck. That means they have little to no money left over for savings after covering their monthly expenses. Nearly 6 in 10 Americans (59 percent) are uncomfortable with their level of emergency savings.
How many Americans have zero debt? ›
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more. The exact definition of debt free can vary, though, depending on whom you ask.
What population of US has no savings? ›
Emergency savings can come in handy when you need it the most, but a recent survey finds that some Americans don't have it all. Bankrate finds that more than 1 in 4 adults (27%) are in this predicament, representing the highest percentage since the consumer financial services company asked the question in 2020.
Why most people never become financially independent? ›
Lack of financial literacy: If you don't understand the basics of personal finance, such as budgeting, saving, investing, and managing debt, it can be challenging to become financially independent. High levels of debt: If you have a lot of debt, it can be challenging to save and invest money for the future.
How much money is enough to be financially free? ›
The cost of living comfortably: On average, Americans feel they'd need to earn over $186,000 to feel financially secure or comfortable, a 20 percent drop from 2023 but still more than two times what the average full-time, year-round worker earned in 2022 (about $79,000), according to Census Bureau data.
What is the most profitable passive income? ›
25 passive income ideas for building wealth
- Flip retail products. ...
- Sell photography online. ...
- Buy crowdfunded real estate. ...
- Peer-to-peer lending. ...
- Dividend stocks. ...
- Create an app. ...
- Rent out a parking space. ...
- REITs. A REIT is a real estate investment trust, which is a fancy name for a company that owns and manages real estate.
The average monthly expenses for a single person will depend quite a bit on where you live, and if you're living alone for the first time, you might be surprised that most things cost more, not just your rent. The national average expenses for a single person living alone are around $3,500 per month.
How much money do you need to be in the 1% USA? ›
The U.S. threshold for joining the top 1% stands at $787,712 in 2024, a 20% increase from the roughly $652,000 required last year, according to a new analysis of IRS data from SmartAsset.
How much cash do you need for financial independence? ›
The 4% rule says that retirees can withdraw 4% of their savings the first year and then adjust for inflation in future years if necessary to not run out of money in retirement. The 4% rule also assumes a 30-year retirement goal, so if you plan to retire earlier than that, this may not work for you.
How much money do you need to survive in America per year? ›
The national median for living comfortably alone is $89,461, which suggests that a 50/30/20 budget might not be practical for most single people.
