How much wealth do you need to thrive? Here's the breakdown, according to new research.
A recent report from The Aspen Institute found that three in four Americans don't have enough wealth to weather financial setbacks and achieve major life milestones.
Intelligence analysis by Llama
The Aspen Institute's report found that most households fall short of its 'essential wealth' benchmark, which includes six weeks of take-home pay in savings and a high enough net worth to achieve homeownership and retirement security.
Imagine you have a savings account that can help you weather a short-term setback, like losing your job. But if you don't have enough money in that account, you might struggle to make ends meet. That's what's happening for many Americans, who don't have enough 'essential wealth' to achieve major life milestones like buying a home or retiring comfortably.
Analysis
A Financial Reality Check
The Aspen Institute's report highlights a stark reality for many Americans: they don't have enough wealth to weather financial setbacks and achieve major life milestones. The report defines 'essential wealth' as having six weeks of take-home pay in savings combined with a high enough net worth to achieve both homeownership and retirement security. The fact that most households fall short of this benchmark is a signal for the financial frustrations and nihilism that many Americans are experiencing. People feel like they can't get ahead, and that they don't have enough.
The Age Factor
The amount of money required to meet the 'essential wealth' threshold increases with age. People under 40 who meet the threshold have enough money to afford a down payment on an entry-level home. The figures for people who are 40 to 49 and 50 to 64 are based on median incomes, and could be higher or lower depending on a household's income. Brown emphasized that the thresholds are a ballpark estimate of what people might need, and that they could change depending on income, location and other variables.
A Record of Financial Insecurity
Across all age groups, Americans are failing to meet the threshold to achieve lasting financial security. Twenty-nine percent of those aged 65 and older meet the essential wealth criteria, the highest level of any group. This highlights the need for Americans to take a closer look at their financial situation and make changes to achieve financial stability.
Key points
- Three in four Americans don't have enough wealth to weather financial setbacks and achieve major life milestones.
- The Aspen Institute defines 'essential wealth' as having six weeks of take-home pay in savings combined with a high enough net worth to achieve both homeownership and retirement security.
- The amount of money required to meet the 'essential wealth' threshold increases with age.
- Twenty-nine percent of those aged 65 and older meet the essential wealth criteria, the highest level of any group.
If Americans can take steps to increase their savings and invest in their financial futures, they may be able to achieve the 'essential wealth' threshold and achieve lasting financial security.
If Americans continue to struggle with financial insecurity, they may face a future where they are unable to achieve major life milestones, leading to feelings of frustration and nihilism.
