Do you think you are financially secure? Here’s how much people say it takes to “feel” safe, and what you really need

Money can be difficult, especially when you’re figuring out what it means to feel “financially secure.” With so many factors at play, it’s easy to wonder how you fit in.

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Financial security isn’t just about having some extra money in the bank. It’s about preparing for life’s unexpected twists and turns and making sure your long-term goals stay on track. That means being able to cover today’s needs and still do whatever the future throws your way.

According to a recent Bankrate survey, many Americans believe they need an annual income of about $186,000 to feel secure, but the reality for most households is quite different. The median household income is between $51,500 and $86,000, creating a noticeable gap between what people think they need and what they earn.

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Despite improvements in some areas of the economy, a significant 33 percent of Americans still feel financially insecure, according to data from Northwestern Mutual. This gap between economic growth and personal financial confidence makes it clear that growth on paper does not always translate into people feeling secure.

So what does financial security look like? While it’s different for everyone, here are some common signs:

• A solid emergency fund that covers 3-6 months of expenses

• Active savings for pensions

• Little or no debt

• Good insurance coverage

• The ability to handle unexpected expenses without breaking the bank

It’s important to remember that reaching this level of security isn’t just about having a big salary, it’s about smart financial planning. A useful strategy is the 50/30/20 rule: dedicate 50% of your income to your needs, 30% to the things you want, and 20% to savings or paying down debt.

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Net worth is another key piece of the puzzle when assessing your financial health. Federal Reserve data for 2022 gives an idea of ​​average net worth by age group:

• Under 35: $183,500

• 35-44: $549,600

• 45-54: $975,800

• 55-64: $1,566,900

• 65-74: $1,794,600

• 75 and over: $1,624,100

Experts often suggest aiming for a net worth of 3-5 times your annual income by age 45 and 7-9 times by age 65. These are guidelines, of course, as everyone’s situation differs.

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For retirees, having a significant financial cushion is crucial. Financial security in retirement often means having more than $500,000 in savings, and many financially secure retirees have more than $1 million.

But remember, financial security isn’t just about numbers. It’s also about how you feel—being confident that you’re not constantly worrying about money. The key is to make financial decisions that align with your goals and values.

Building financial security can be challenging, especially with inflation being a concern for many. But it is achievable with careful planning, consistent saving and making lifestyle adjustments.

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If you’re not sure where to start, consider consulting a financial advisor. They can help you create a custom plan that fits your needs and puts you on the path to security.

Financial security in 2024 is more than a high income. It’s about creating a stable foundation to deal with life’s uncertainties while helping you move toward your long-term goals.

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This article Think you’re financially secure? Here’s How Much People Say It Takes To “Feel” Safe And What You Really Need appeared originally on Benzinga.com

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