Would you rather have an extra $1 million in your retirement account or add five more healthy years to your life?
If you’re finding it hard to choose, you’re not alone. A new report titled “Everyday Wealth in America” found that when it comes to the choice between health and money, people are essentially split 50-50. The annual report was produced by Edelman Financial Engines (EFE) and is based on a survey of 3,000 Americans over the age of 30 who were asked to choose between $1 million and five years of good health.
However, when presented with the choice of 10 years of good health, it’s a completely different story: 19% of people would choose 10 more years over money, for a total of 68% who would choose 10 years of good health.
“The way I interpret this is that the value over five years is [about] “Twenty percent of people have $1 million, so one year of your life is worth $200,000,” says Gene Chatzky, a financial expert and partner at EFE. “It’s easy to look back and see five years into the future, but 10 years out is a little harder. It forces you to think about what great things might happen that you didn’t expect.”
Of course, health and wealth aren’t an either/or issue, Chatsky says. The two often go hand in hand, and generally speaking, taking care of your health can lead to savings on medical expenses down the road.
But “if you’re not financially stable, you’re more likely to not be able to take care of your health care, and so your health needs will suddenly increase,” she said. “We think of it as a choice, but the reality is that you have to do both.”
Young homeowners feel ‘handcuffed’
This is just one aspect of the report’s wide-ranging findings on everything from how much money Americans need to feel wealthy to estate planning.
On the former question, only about 12% of respondents considered themselves “wealthy,” but two-thirds would be within that threshold if they had $1 million in the bank. Nearly 60% said they needed to earn at least $100,000 a year to live comfortably, and about 25% said they needed twice that amount.
According to Chatzky, the housing market is a big reason why many Americans aren’t better off: Nearly half (49%) of homeowners under 50 “feel trapped in their current home because interest rates make it impossible for them to move,” compared to 36% of all homeowners.
Sure, mortgage interest rates may be low now, but as their family grows or they need extra space for other reasons, and rising interest rates and prices make it harder to afford a new home, people will become more pessimistic about their financial realities.
“They feel shackled, and it makes you feel like you’re not wealthy,” she says. “Even if you look at Zillow and you see what your house is worth, that’s not money you can access.”
Chatzky says another statistic underscores this dissatisfaction: More than 40% of Americans, including 56% of those in their 30s, said they would be willing to move to another state if it meant saving money. Assuming home prices don’t fall too much, this is likely to have a big impact going forward, Chatzky says.
“Despite all the talk about renting, the desire to own a home is still very strong for many people,” she said. “We’re going to see more of that mobility going forward.”
