Inflation, geopolitical uncertainty and fears of a recession have undermined financial confidence across the board, according to a new report from Edelman Financial Engines.
Less than a quarter, or 23%, of more than 2,000 adults polled earlier this fall said they felt “very comfortable” about their finances. Fewer — just 12% — consider themselves wealthy, the report said.
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Despite their high net worth, less than half of all millionaires, or 44%, feel “very comfortable” with their finances, and less than one-third, or 29%, are wealthy, the report also found.
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“Becoming a millionaire has always been the pinnacle of financial success,” said Jason Van de Loo, head of wealth planning and marketing at Edelman Financial Engines.
But at a time when inflation and stress levels are high, and markets and portfolios are down, “very few Americans feel truly wealthy.”
‘What would it take to feel rich?’
These days, fewer Americans, including millionaires, feel confident about their finances.
According to a separate report by Bank of America, 71% of workers feel their pay is not keeping up with the rising cost of living, bringing the number of people who feel financially secure to a five-year low.
A majority of adults said they feel less financially secure than they had hoped to at this point in their lives, Edelman Financial Engines also found.
To feel rich, most people said they would need $1 million in the bank, although high-net-worth individuals set the bar much higher: More than half said they would need more than $3 million, and one-third said it would take more than $5 million. .
“What would it take to feel rich?” Van de Loo said. “The short answer is more.”
Americans feel the sting of inflation
Regardless of how much money they have, Americans across the board are downsizing or stopping businesses due to inflation and higher prices, including buying fewer things, spending less on food and entertainment, and for retirement or other long-term goals. Includes less savings. .
Already, credit card balances rose 15% in the most recent quarter, the biggest annual jump in more than 20 years.
At the same time, the personal savings rate fell to 2.3% in October, a 17-year low.
“People are probably getting a lesson in frugality this year,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.
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