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What Does the Average American Need to Feel Financially Healthy?


  • Financial health is rooted in a sense of freedom. The vast majority of recent survey respondents (81%) say, “I will feel financially well when I have the freedom and ability to spend how I want to.”
  • Financial wellbeing can also feel elusive. A majority (60%) feel confident in their ability to achieve financial health, but only 48% feel financially healthy today.
  • Nearly 7 in 10 (69%) face at least one roadblock to financial wellness. Lack of income (27%) and constant expenses (23%) are top barriers.
  • Most people think they won’t achieve financial health until nearly age 50 – or when they have over half a million dollars in the bank.


Financial health can be difficult to universally characterize. It hinges on a person’s age, life situation, long-term goals, and myriad other factors. In short, one definition does not fit all.

We asked everyday investors to describe the term in their own words. The results, according to our joint survey with Empower-Retirement,* demonstrated that financial health boils down to one important concept: financial freedom.

The vast majority of our survey respondents (81%) agree, “I will feel financially well when I have the freedom and ability to spend how I want to.”

Here’s how one investor describes his sense of financial health:

“It means that I understand where we are financially. When we make a decision to purchase or do something, we don’t have to second guess whether we’re making the right decision or not — at least from a financial perspective. It’s a luxury not to have to question every purchase.”

— Bill H., a Personal Capital investment client in an unpaid testimonial

Of course, this peace of mind isn’t instantaneous. It likely comes after building solid financial habits over time. Indeed, most survey respondents agree that “financial health is more of an ongoing journey” (72%), rather than “achieving a specific milestone” (28%).

“In the wake of the pandemic, Americans have changed their relationship with money, and as a result, how they define financial wellness,” said Edmund F. Murphy III, President and CEO of Empower Retirement. “Now it becomes even more important to help Americans with a personalized, holistic view of their finances and savings goals.”

Following are insights from “The Journey Toward Financial Freedom.”

What Americans Need to Feel Financially Healthy

Our survey respondents offered insights into the figures of financial health:

  • how old they think they need to be in order to feel financially well
  • how much they need to have saved to feel financially well

These numbers varied according to generation and gender.

Generational Breakdowns

Most people think they won’t achieve financial health until nearly age 50 – or when they have over half a million dollars in the bank.

In general, younger respondents think they need less money at a younger age to feel financially healthy. Gen Z respondents are optimistic that they’ll achieve a sense of financial wellness at a younger age than their peers. Boomers, on the other hand, feel slightly behind others their age.

Gen X may be the generation of supersavers, as they think they need the most money to feel financially well.

Savings are only one part of the overall picture of a person’s financial health.

The majority of our survey respondents (73%) say net worth is a top indicator of how financially healthy they are. But far fewer (66%) can actually estimate their net worth.

Try It: Calculate Your Net Worth

According to what we see across the 3 million people who use the Personal Capital Dashboard, the median net worth doesn’t surpass $500,000 until a person reaches age 60 — much later than our survey respondents anticipate attaining a sense of financial health.

So what can people do to play catch up? Personal Capital’s certified financial advisors weigh in with tips for increasing your net worth throughout your lifetime.

Read More: The Average Net Worth By Age

Gender Breakdowns

On average, the men we surveyed believe financial health comes sooner and with higher savings than women.

Our male respondents say an investor needs to sock away $624,666 — more than the general public believes is necessary for financial health. Women think you need less than average ($402,838). This could be because women, on average, earn 84% of what men earn and, therefore, are likely to save less over their lifetime. In addition to lower wages, women overall are less likely to invest, and when they do, they invest less but live seven years longer on average.

Men in our survey think financial health comes at age 45 — about four years sooner than women. In their personal lives, men feel financially healthy at about 47; women on average feel healthy at age 51.

The wage and investing gaps have put women at a disadvantage in their potential to build wealth. How can these gaps be closed? One catalyst is financial education on wealth drivers like compensation negotiation and long-term investing.

Read More: Closing the Gender Wealth Gap

How Americans Self-Rate Their Financial Health in the Pandemic

Even under normal circumstances, money management is a core component of overall wellness. Our survey found that 77% of Americans agree “my financial health also affects my physical and mental health.”

Most respondents (60%) report feeling confident in their ability to achieve financial health, but only 48% feel financially healthy today.

Numerous factors impact people’s sense of financial wellness. The majority of our survey respondents (69%) say they face at least one roadblock to financial wellbeing. The highest barriers? Lack of income (27%) and expenses constantly piling up (27%).

Not everyone’s finances have been adversely affected by the global health and economic crisis. Thanks to reduced spending and stimulus payouts, some Americans increased their savings during the pandemic. The pandemic also impacted financial mindsets.

Survey respondents see an emergency fund as an increasingly important priority. Data from Personal Capital’s user base indicates the same — particularly among younger investors. People in their 20s park a higher percentage of their assets in cash (28.4%) than any other age group, except retirees in their 80s (29.4%) and 90s (31%).

The median cash balance in the portfolios of those in their 20s is $31,589. Investors in their 30s keep 25.4% of their portfolio assets in cash (with a median cash balance of $53,377).

How to Work Toward Financial Freedom

If — like our survey respondents — your ultimate goal is being able to spend how you want, following are five tips to move you closer to financial freedom.

  1. Track Your Net Worth

Knowing where you stand is the first step toward where you want to be.

One investor who learned this personally is Andy Hill, a financial podcaster and father who achieved the financial milestone of becoming a millionaire in his 30s. He and his wife Nicole started their wealth-building process with the simple exercise of identifying their net worth: a disheartening -$50,000.

But they weren’t deterred. “After getting over that momentary financial depression, I realized this wasn’t something to be sad about,” Andy wrote on Daily Capital. “This was an opportunity to change the course of our lives and the lives of our future children.”

In your own planning, decide what you want to achieve within a given timeframe and work backward from there.

Read More: How Tracking Our Net Worth Motivated Us to Achieve Financial Freedom

  1. Set Financial Priorities

Once you have a holistic understanding of your finances, you can start to set your financial priorities. These priorities are the big-picture ways you want to use your money. Setting these priorities can feel overwhelming.

Write down your plan for achieving your financial goals, recommends Brian Cocos, CFP®, a Personal Capital advisor.

“This will give you something you can refer back to periodically to make sure you remain on track,” he said. “You should review your financial plan every 12 to 18 months to monitor your progress and make adjustments as necessary.”

  1. Establish an Emergency Fund

Of our survey respondents, 51% say having an emergency fund is their highest financial priority amidst the pandemic.

Most experts suggest saving enough cash to cover three to six months of expenses based on your average monthly spending. First, calculate your average monthly spending. Be sure to exclude discretionary spending like dining out, travel or shopping. Concentrate on your unavoidable costs — housing, insurance, transportation, food, debt payments, and the like. Tip: You can do this automatically with Personal Capital’s online financial tools.

Once you have your number, multiply by the amount of months you’d like to save for. As your circumstances change, your savings goal may need adjustments, too.

Read More: How Much Should You Have in an Emergency Fund?

  1. Invest Consistently (and Automatically)

Investing to achieve financial freedom requires discipline and a long-term perspective.

This can be difficult when you’re faced with more pressing financial priorities and emergencies, like home repairs and unexpected medical expenses. Investing can also be an emotional challenge during times of market volatility.

Cocos, the Personal Capital advisor, suggests developing discipline with a strategy known as dollar-cost averaging. That means investing the same amount of money at regular intervals, such as each pay period, usually via an automatic investing plan.

This way, your investments are spread out evenly over time, which could result in buying more shares at lower prices and fewer shares at higher prices.

“Also,” Cocos added, “we are creatures of habit, so something that is easy and automated will likely continue without contest, helping grow your balances.”

  1. Create Ongoing Financial Habits

Indeed, from what we eat to when we sleep, many people appreciate a normal routine. Our survey indicates that finances follow suit: 69% say sticking to a consistent savings approach is vital to generating financial wellness.

One way to keep savings constant? Set it and forget it. Send cash to your savings account if you’re squirreling away money for your emergency fund or a big-ticket, near-term expense. Otherwise, direct your income toward long-term investments, as Cocos recommends.

You can stay on track by minding your progress. Be sure to:

  • Review and categorize your spending to stay within your budget
  • Keep an eye on your investments, especially hidden fees
  • Focus on long-term goals like buying a home or retiring from work

One way to build these financial habits is by using online money-management tools like the Personal Capital Dashboard. More than 3 million U.S. households use this technology to get an overview of their finances, all in one place, and track their net worth over time.

The bottom line? Financial wellness is personal. Establishing healthy practices is the best way to work toward your definition of financial freedom.

Read the eBook: The Journey Toward Financial Freedom

*This survey was conducted by The Harris Poll on behalf of Empower Retirement and Personal Capital from March 23 to April 5, 2021. We surveyed 2,005 people, all of whom were 18+ and living in the U.S. The online survey has a +/- 3% margin of error and a 95% confidence level. Respondents were screened for age, household income, and investible household assets with an equal male/female split. Those participating had a minimum age of 40, a minimum $50,000 annual household income before taxes, and a minimum $100,000 combined household net worth, excluding primary residence.

Andy Hill is not a client of PCAC and does not make any endorsements or recommendations about securities offerings or investment strategy. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation (“PCAC”), a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Alicia Castro is the Managing Editor of Daily Capital.
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Let us know…

This year, my top financial priority is:

Building my emergency fund
Paying off high-interest debt
Budgeting better
Saving for a short-term goal, like a vacation or new car
Increasing my investment contributions
Maintaining status quo - I’ve got this under control

Make moves toward your money goals with Personal Capital’s free financial tools.