Economy
April 14, 2014

Comfort Gap: The More You Make, The More You Need

[To see the official press release and get more info on the COUNRY Financial Security Index, click here]

When it comes to finances, comfortable, well-off and secure are not all created equal, according to the latest COUNTRY Financial Security Index.

The Comfort Gap

A majority of Americans (59 percent) say it’s not possible or are unsure if it’s possible for someone to achieve financial security with a middle-class income.

Americans also expressed concerns about what can be called a “comfort gap.” In short, for many Americans “comfortable” and “well-off” are not one in the same.

  • Nearly half (48 percent) of Americans say $50,000 to $100,000 is enough to live comfortably in the current economic environment.
  • However, just 34 percent consider someone earning a $50,000 to $100,000 income as “financially well-off.”

This gap is even more pronounced among higher income groups. As incomes rise, so do Americans’ view of how much you need to be “well-off.” While all income groups are more likely to say $50,000 to $100,000 is enough for an individual to live comfortably, the more they make, the more likely Americans are to say a higher income is what is necessary to be financially well-off.

Let’s Break it Down

Middle ClassComfort Gap

America’s middle class: the incredibly shrinking everyone?

If you feel like you’re part of the middle class and you’re struggling, you’re not alone. A majority of Americans (55 percent) consider themselves middle class (versus wealthy, upper-middle class or low-income), regardless of their actual personal income in most cases.

  • This belief is most evident among people in income brackets under $50,000, $50,000 to $100,000 and $100,000 to $200,000.
  • While most Americans feel like they’re in the middle class, they also believe this group is shrinking, with 55 percent saying the middle class is smaller than it was 10 years ago.
  • Of those who say it’s smaller, 64 percent feel it is because the low-income population has grown.
  • One in four (26 percent) say it’s because there are more of those considered wealthy.

So who considers themselves wealthy?

The answer? Very few. According to our index, just 3 percent consider themselves wealthy. This small group is more likely to say a lower income is all that’s necessary to be comfortable, financially well-off and financially secure.

  • A majority (52 percent) of those who consider themselves wealthy say $25,000 to $50,000 is enough annual income for an individual to live comfortably.
  • Forty-one percent say $25,000 to $50,000 is enough annual income for an individual to be considered well-off.
  • Six in ten (59 percent) say it is possible to achieve financial security with a middle-class income.

Aim for the “Comfort Class”

Let’s throw the old income brackets out the window for a minute and add a new term: comfort class. As what we traditionally see as the middle class gets smaller, perhaps we should focus on closing the comfort gap instead, and get to a place where Americans feel they can meet all their current financial obligations and still save for the future, no matter their income bracket.

Financial stability is different for everyone, whether you want to call it comfortable, well-off or secure. What does financial stability mean to you?

 

For more tips on how to achieve financial security, click here.

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