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What would you need to have achieved in life to feel like you’ve “made it”? A six-figure salary, a sports car in your driveway, and the job title of your dreams, perhaps? In reality, it’s much more simple (or rather, less materialistic) than that: new research shows that most Americans define “making it” as reaching financial independence.
In fact, 67% of the 2,000 adults in the U.S. surveyed by Empower financial services, described achieving that milestone as the most important marker of success—and the salary needed to get there is less than one might expect.
But less than a quarter have achieved independence, according to Empower.
Changing times
Traditionally, finding a vocation you enjoyed (and that paid a decent wage), fleeing the nest to a home of your own and settling down, wasn’t just the American dream—it was the status quo, with the typical homebuyer in 1981 between 25 and 34 years old.
But young people today are at the mercy of soaring rental costs and heavy student debt—all while navigating a difficult job market.
Financial independence is arguably harder than ever before; In fact, over half of those surveyed said they still rely on their family and friends for financial support, especially for help paying their rent (62%), internet and streaming services (56%) and their phone bill (54%).
It’s why Americans have previously insisted that they’d need to earn a whopping $233,000 to live comfortably in today’s climate.
Perhaps surprisingly then, financial freedom comes at a much lower price point in the eyes of the average American, according to Empower—about $94,000 a year, is how much they said they’d need to earn to feel financially independent.
But that’s still about $20,000 more than the median household income of $74,580.
How to achieve financial freedom
There are several ways people may consider themselves financially independent, according to the research. For some, it means being able to live off a passive income and kick your feet up, instead of setting a 7 a.m. alarm and heading into work every day.
But for most of those surveyed, financial freedom means not needing money from family and friends—essentially being able to forge a life away from the familial home.
Despite parents wishfully thinking that their offspring will get to that stage by 23 years old, 92% of the few financially independent adults surveyed admitted they only started to feel that way once they reached the age of 36.
“Reaching a certain net worth” and “starting to contribute to a 401(k)” were also popular definitions, but Empower’s financial expert Keith Jones advises that people should ignore how others define the term and instead decide what it looks like for you.
“No matter your age, financial independence starts with clarity,” Empower’s Jones said in the survey release. “Establishing clear financial goals provides both direction and purpose, motivating you to work towards a more secure and satisfying financial future.”
The top 10 signs you’ve financially “made it” in life
- Being financially independent/not relying on anyone else for money—44%
- Moving up in my career/getting promoted—39%
- Having a job I love—37%
- Making a certain amount of money—25%
- Not having to work at all—25%
- Being able to spend money without worrying—22%
- Being able to pay my bills on time—9%
- Buying luxury items I want—7%
- Being able to retire comfortably—7%
- Buying a home—6%
Source: Empower
