In recent years, the notion of financial comfort and wealth has become increasingly elusive for many Americans, leading to a growing number of individuals identifying as HENRYs (high earners, not rich yet). According to a new report from Edelman Financial Engines, the bar for financial prosperity has been raised, with $1 million no longer considered the gold standard.

The Federal Reserve's survey of consumer finances revealed that the average household net worth has witnessed a significant increase of 37% between 2019 and 2022. Despite this surge in wealth, inflation and economic instability have left more people falling into the HENRY category. Edelman Financial Engines found that only 14% of Americans consider themselves wealthy, and this perception is becoming increasingly unattainable.

Even individuals with higher-than-average salaries have faced challenges due to rising costs of living and a growing savings shortfall. A majority of Americans, earning over $100,000 per year, have admitted to living paycheck to paycheck. Market volatility, along with economic uncertainty over the past two years, have taken a toll on individuals and families regardless of their wealth, according to Kelly O'Donnell, Chief Client Officer at Edelman Financial Engines.

The report also highlighted that in 2023, 67% of Americans believed they would need at least $1 million to feel rich, reflecting a rise from 57% the previous year. Remarkably, around 20% of respondents stated they would require $5 million or more to achieve that rich status. "That million dollars is just not getting you as much," remarked O'Donnell. Consequently, more people have started relying on credit cards to cover their day-to-day expenses, leading to a record-high credit card debt and a decline in personal savings rates.

One of the key findings of the report is that financial security is less about the total amount of money one has and more about the ability to spend less than what they earn. Certified Financial Planner Jason Friday, from Citizens Wealth Management, emphasized the importance of individuals understanding their long-term financial goals in order to create a balance between spending and saving.

Historically, homeownership has been associated with feelings of wealth. However, the housing market's skyrocketing prices and higher mortgage rates have discouraged potential buyers. Edelman Financial Engines found that 45% of prospective homebuyers feel disheartened by the current high prices, even among respondents with household assets of up to $3 million. This has led to increased stress and has further highlighted the deterioration of the American dream.

Senior Economic Analyst Mark Hamrick, from Bankrate, suggests that long-term changes have adversely affected Americans' ability to manage their personal finances. He emphasized that the days when a single wage-earner could support a family are mostly relics of the past. Structural shifts in the economy have contributed to financial insecurity among many households.

As Americans grapple with the ever-increasing financial challenges, it becomes crucial to establish long-term financial goals and work towards them. Breaking free from the pressures of keeping up with societal expectations and being mindful of spending habits can help individuals achieve a more secure and balanced financial future.

In conclusion, the Edelman Financial Engines report sheds light on the growing phenomenon of people identifying as HENRYs, signifying the difficulty many Americans face in feeling financially secure. The shifting perception of wealth, rising costs of living, and economic volatility have created a financial landscape where traditional indicators of prosperity, such as homeownership, have become less attainable. To navigate these challenges, individuals are encouraged to focus on long-term financial planning and adopt a lifestyle that emphasizes spending less than what they earn.