What age do people struggle the most financially?
Older millennials, aged 35 to 44, are the least likely to say they feel “financially well,” according to Bank of America's 2023 Workplace Benefits Report, which surveyed more than 1,300 employees and 800 employers across the country. A full 80% report feeling stressed out by their financial situations.
More than half, or 53%, of Gen Zers say higher costs are a barrier to their financial success, according to a separate survey from Bank of America. In addition to soaring food and housing expenses, millennials and Gen Z face other financial challenges their parents did not as young adults.
Financial literacy peaks at about the age of 54 and then declines, according to a study last year by Australia's ARC Centre of Excellence in Population Ageing Research.
The reasons that most people struggle financially will vary on the individual case but can include a lack of financial literacy, a scarcity mindset, self-esteem issues leading to overspending, and unavoidable high costs of living.
In 2021, adults who were 21 were less likely to have a full-time job; be financially independent, living on their own or married; or have children than their predecessors from 1980. Today's young adults are closer to full-time employment and financial independence by age 25, the analysis of Census Bureau data shows.
However, over the next twenty years, Millennials are poised to inherit some $90 trillion of assets and become the richest generation in history – but only the ones who already come from affluent families, potentially deepening wealth inequality further.
For example, a new study by the Investment Company Institute (ICI) finds that “Gen Z households have nearly three times more assets in the [retirement] plan accounts (adjusted for inflation) that Gen X households did at the same age.” More Gen Z-ers have retirement plans set up and they've saved more in those accounts.
By age 25, you should aim to have an emergency fund of 3-6 months of living expenses, and start regularly contributing to retirement savings to take advantage of compound interest over time, even if it's just small amounts.
By age 25, you should have saved at least 0.5X your annual expenses. The more the better. In other words, if you spend $50,000 a year, you should have about $25,000 in savings. If you spend $100,000 a year, you should have at least $50,000 in savings.
There's no one-size-fits-all answer to this question. Some people begin covering all their own living expenses starting from age 18. Others become financially independent in their 20s or 30s.
How many Americans live paycheck to paycheck?
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.
After inflation, high interest rates, unattainable housing prices and other economic factors, 50 percent of U.S. adults say their overall personal financial situation is worse than it was in November 2020, according to October 2023 Bankrate polling.
More than 17 million Americans age 65+ are economically insecure—living at or below 200% of the federal poverty level (FPL) ($29,160 per year for a single person in 2023).
- Savings by age 30: the equivalent of your annual salary saved; if you earn $55,000 per year, by your 30th birthday you should have $55,000 saved.
- Savings by age 40: three times your income.
- Savings by age 50: six times your income.
- Savings by age 60: eight times your income.
The vast majority (92%) of financially independent Americans said they only started to feel that way once they reached the age of 36. “No matter your age, financial independence starts with clarity,” Keith Jones, a senior financial professional with Empower, said in a Jan.
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more. The exact definition of debt free can vary, though, depending on whom you ask.
While millennials might be dissatisfied about things it turns out that it's actually Gen Z who is REALLY unhappy. According to the World Happiness Report for 2024, Gen Z is, right now, the unhappiest generation.
The highest average American net worth belongs to those aged 65 to 74 at $1,794,600. Americans 55 to 64 years old have the second-highest average net worth at $1,566,900.
Gen Z has experienced higher poverty rates than millennials, Gen Xers and baby boomers, according to the KIDS COUNT Data Center, but Gen Alpha is the poorest generation to date.
By generation, both Gen Z and Millennials say they expect to need more than $1.6 million to retire comfortably, while high-net-worth individuals say they'll need nearly $4 million.
Are Gen Z or millennials smarter?
A growing discourse suggests that Generation Z (Gen Z) is endowed with higher cognitive abilities compared to their predecessors, the Millennials.
With that said, Gen Z is a credit-friendly generation--they're just careful about falling into debt traps. Sixty-five percent of Gen Z is credit active and half have a credit score of 661 or above. (Only 39% of Millennials had the same score or higher!)
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.
From age 18-24, only 1% of earners (7% altogether) earn $100k per year or more. This makes these age groups by far the lowest earners in the US. Americans make the most income gains between 25 and 35. Only 2% of 25-year-olds make over $100k per year, but this jumps to a considerable 12% by 35.
While $20K may not let you quit your job, it's enough to start building financial security, whether you max out your retirement accounts, invest in fine art, or divide your cash between multiple investments.
