Here’s the average salary each generation says they need to feel ‘financially healthy’. Gen Z requires a whopping $171,000/year — but how do your own expectations stack up?

Here’s the average salary each generation says they need to feel ‘financially healthy’. Gen Z requires a whopping $171,000/year — but how do your own expectations stack up?

As the global COVID-19 pandemic rages on, another “health” crisis rages across the U.S.

Nearly 4 in 10 Americans say they feel “financially unhealthy” as prices remain high after a year of record inflation. However, how much you think you need to be financially well off may depend more on what year you were born than how much is in your bank account.

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Gen Z say they need an average salary of $171,633 to feel financially healthy – the highest income compared to older generations – according to research by personal finance firm Personal Capital and health care provider Empower Retirement, conducted by The Harris Poll.

But even as Americans remain concerned about the state of their finances, experts say not to give up hope.

“In a busy market, there are many opportunities to take control of your money,” said Craig Birk, chief investment officer at Personal Capital. “Knowing your net worth puts you in the driver’s seat because you need a real-time measure of your financial health to make smart moves.”

How much each generation needs to feel ‘financially healthy’

Here’s how much each generation says they need to earn to feel comfortable:

  • Gen Z: $171,633

  • Millennials: $133,758

  • Generation X: $112,222

  • Baby boomers: $78,317

However, when it comes to how much savings these generations believe they need to keep, the numbers differ dramatically.

  • Gen Z: $105,299

  • Millennials: $349,784

  • Generation X: $566,975

  • Baby boomers: $764,999

While Gen Z has the highest salary expectations for being financially healthy, they have the lowest expectations when it comes to how much they need to save – and vice versa for boomers.

Paul Deer, vice president of advisory services at Personal Capital, theorized for CNBC that this could be related to the real estate market. Younger generations may feel they need a higher income to pay expensive mortgage rates and plan for their retirement.

“Lower savings for younger generations basically means you have a stronger need to be able to build a nest egg,” Deer said.

See more information: Here’s how much the average 60-year-old American has in retirement savings – how does your nest egg compare?

Deal with the immediate first

Even if you still can’t hit the salary mark you need, you still have options when it comes to maximizing your income and growing your savings.

“Yes, making more money is great, but it’s what you do with your earnings that makes the real difference,” says Lacey Cobb, director of consulting solutions at Personal Capital.

“Regardless of the number on your paycheck, avoiding high-interest debt and saving a significant percentage of your income can put you in a better position in the long run.”

One of the first steps to financial well-being is dealing with your debts – especially those with the highest interest rates. Thanks to exorbitant consumer prices, Americans are increasingly dependent on their credit cards and household debt is mounting.

But with credit card interest rates hitting record highs in response to the federal funds rate, now is not the time to let your monthly payments slide. Make sure you do what you can to pay them in full and on time.

So plan ahead

Once you get your debt under control, make sure you put some savings away as well. The Personal Capital survey found that 58% of Americans are investing more in their short-term and retirement savings. But if the pandemic has taught us anything, it’s extremely important that you have some emergency funds for an unexpected expense.

And with many predicting they’ll need $1.25 million in savings to comfortably retire, you should start preparing for your financial future right away.

While investor sentiment may be low at the moment, Birk advises against panic selling your investments.

“Stocks can be a secret weapon because they offer one of the best chances of mitigating the impact of inflation, and in the long run, you are well positioned to beat it multiple times.”

Consider building a well-diversified portfolio with sectors that have traditionally performed well through economic cycles, such as consumer staples and utilities.

With a little focus and some hard work, you’ll be feeling financially strong again in no time.

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This article provides information only and should not be construed as advice. It is provided without any kind of warranty.

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