In what may be a sign of how expectations have been lowered by
the bad economy in recent years, most Americans don't feel they
need to make six figures to be successful, according to a recent
survey. But while it's fine to aim for relatively modest financial
goals, if your goals are too modest, they may sell your retirement
from earlier this year by CareerBuilder.com found that 75 percent
of Americans would feel successful with a salary under $100,000.
Twenty eight percent of survey respondents said they would need to
make between $50,000 and $70,000 to feel successful, while 23
percent said they could feel successful earning less than
The trouble with low expectations
The problem is, overly modest financial goals may be a sign that
Americans don't fully understand how much money they will need in
retirement. Before you settle for less, here are five questions you
should ask yourself.
Are you factoring in the need to save for
If you are content with your salary because you can easily pay
all your bills, does that include being able to put aside money
for retirement? Americans' savings rates have been
, and until you are adequately saving for retirement, you aren't
really meeting all your financial needs.
Are your retirement goals adjusted for
$100,000 may sound like a lot of money, but at a 3 percent
inflation rate, it would be worth just over $41,000 in 30 years.
Especially if you are young, your retirement years -- in
particular the back end of your retirement years -- are a long
way in the future. Make sure your saving and income goals for
those distant years are adjusted for inflation, and not based
upon today's dollars.
Are you in a high-risk occupation?
For reasons including physical risk, stress or simply the demands
of the job, some occupations tend to have shorter careers. If
that's true of your job, then you should have higher income
goals. This isn't simply to compensate you for the risk or
difficulty of what you do; it is also a practical necessity. A
shorter career means both fewer earnings years and a
longer retirement period
. That requires higher savings rates, which people can generally
only accomplish by earning an above-average income.
Have you accounted for the size of your family?
One drawback of a generalized financial survey is that the income
figures involved don't take into account differences in personal
situations. For example, there is a world of difference between a
single person earning $70,000, and someone with five kids trying
to get by on the same salary. Before you settle on income and
savings goals, make sure you have accounted for the size of your
family -- including your plans for future additions to that
Have you adjusted your goals for where you live?
One other way that broad national studies need to be adjusted for
individual situations is to account for cost-of-living
differences. An annual salary of $50,000 goes much further in a
rural area than it does in New York City.
If Americans really are willing to get by with less money, the
best way for them to do it would be boost their savings rates so
they are spending less now, and putting more aside for the future.
Otherwise, they may regret those modest income goals when