Board of Governors of the Federal Reserve System

Overall Financial Well-Being

The share of adults doing at least okay financially rose to the highest level since the survey began in 2013.² Although financial challenges and risks to the recovery remain, this generally positive assessment of financial well-being was consistent with improved economic conditions and additional COVID-19 relief measures in 2021.

The increase in financial well-being occurred broadly across the population and was especially large among parents. Even so, existing gaps by education and by race and ethnicity persisted.

Current Financial Situation

At the end of 2021, 78 percent of adults were doing at least okay financially, meaning they reported either "doing okay" financially (39 percent) or "living comfortably" (39 percent). The rest reported either "just getting by" (16 percent) or "finding it difficult to get by" (6 percent). The 78 percent of adults doing at least okay financially in 2021 was up 3 percentage points from 2020 and was well above the 62 percent doing at least this well in 2013 (figure 1).

As further evidence of greater financial well-being in 2021, the share of adults who said they were living comfortably rose by 4 percentage points. This increase in financial well-being aligns with improved economic conditions and the additional COVID-19 relief measures enacted in 2021.³

Adults with at least a bachelor's degree continued to be much more likely to be doing at least okay financially (91 percent) than those with less than a high school degree (49 percent). The 42 percentage point gap in well-being was little changed from the 44 percentage point gap in 2020 (figure 2). Moreover, looking over the past five years shows a steady and sizeable increase in financial well-being among those with at least a bachelor's degree (an increase of 9 percentage points in the share doing at least okay from 2016 to 2021), while adults with less than a high school degree have not experienced lasting gains in financial well-being.

Parents were one group that experienced particularly large gains in financial well-being over the prior year. In 2021, three-fourths of parents said they were doing at least okay financially, up 8 percentage points from 2020 (figure 3).

Low-income parents saw even more substantial increases in their financial well-being in 2021. Among parents with income under $25,000, the share doing at least okay financially rose by 13 percentage points, from 40 percent in 2020 to 53 percent in 2021. The share of parents with income between $25,000 and $49,999 who were doing at least okay financially increased by 7 percentage points, while those with higher income exhibited more modest improvements.

A potential explanation for the large rise in financial well-being among parents is the expansion of the CTC. The American Rescue Plan temporarily increased the CTC from $2,000 per child to $3,000 per child ($3,600 for a child under age 6), increased eligibility among low-income families, and paid the credit monthly (the "Income" section of this report discusses how parents used this credit).⁴ Many families also saw a return to in-person schooling in the fall of 2021, which may have eased childcare responsibilities and allowed some parents to return to work or work more hours.

The increase in financial well-being among parents in 2021 contrasts with the decline they experienced from 2019 to 2020 (figure 3).⁵ Parents were hit especially hard by the pandemic in 2020, having experienced higher rates of job loss and having faced disruptions to childcare and in-person K–12 schooling that affected their availability to work. (See the report Economic Well-Being of U.S Households in 2020 for additional information).⁶

Differences in financial well-being across racial and ethnic groups persisted in 2021. Eighty-eight percent of Asian adults were doing at least okay financially, followed by 81 percent of White adults, 71 percent of Hispanic adults, and 68 percent of Black adults (figure 4).⁷

All racial and ethnic groups measured in the survey saw an increase in financial well-being over the prior year, with Hispanic adults seeing a particularly sharp increase. In 2021, the 71 percent of Hispanic adults who said they were doing at least okay was up 7 percentage points from 2020.

The increase in well-being for Hispanic adults was largely concentrated among parents, similar to the pattern for adults overall. The share of Hispanic parents doing at least okay increased 14 percentage points (to 70 percent) in 2021. However, Hispanic adults not living with their own children under age 18 saw a relatively slight increase (figure 5).

Other dimensions across which financial well-being differed include income, geography, LGBTQ+ status, and disability status (table 1). Fifty-five percent of adults with family income less than $25,000 were doing at least okay financially, compared with 96 percent of adults with family income greater than $100,000. People living in low- or moderate-income communities also had lower levels of financial well-being than those living in middle- or upper-income communities.⁸ Additionally, those living in metro areas were faring better than those in non-metro communities.⁹

Table 1. At least doing okay financially (by demographic characteristics)*

Other surveys have shown that adults identifying as LGBTQ+ were more likely to face economic insecurity, suggesting LGBTQ+ status may be associated with financial well-being.¹⁰ Consistent with this evidence, the 2021 SHED found that 67 percent of adults identifying as LGBTQ+ were doing at least okay financially, compared with 78 percent of the overall population.¹¹ Moreover, an even lower 62 percent of adults who were transgender or nonbinary, or who reported their sexual orientation as something other than straight, gay, lesbian, or bisexual, were doing at least okay financially.¹²

Finally, 60 percent of adults with a disability were doing at least okay financially, markedly lower than the overall population.¹³ Prior to 2021, the SHED did not include disability status, so we cannot observe how financial well-being has evolved for adults with a disability through the pandemic. However, as discussed in the "Employment" section of this report, other surveys find evidence of an increase in employment among adults with a disability in recent years.

Changes in Financial Situation over Time

The survey also tracks overall financial well-being by asking respondents whether they are better or worse off financially than they were 12 months earlier. Measuring well-being in this way helps track changes in perceived well-being over time, as some individuals may feel worse off financially than they were a year earlier, for instance, even if they feel they are still doing okay overall (or that their financial well-being is improving even if they are still struggling overall).

The share of adults who said they were worse off financially than a year earlier fell from 24 percent in 2020 to 20 percent in 2021, yet remained much higher than the 14 percent seen in 2019, before the pandemic (figure 6). The share doing about the same as a year earlier increased 3 percentage points to 54 percent, while the share who said they were better off was unchanged at 25 percent.

When asked to compare their financial situation to two years ago, before the pandemic, nearly one-fourth (24 percent) said they were worse off. Forty percent said they were doing about the same, and 36 percent said they were better off than two years ago.¹⁴ Those who were doing worse off than before the pandemic were disproportionately adults with lower family income and less education.

To get a longer-term perspective, individuals were also asked to compare their current financial circumstances to how they perceived their parents' financial situation at the same age. Looking across a generation shows evidence of economic progress over time, despite financial setbacks during the pandemic. A majority of adults (57 percent) thought they were better off financially than their parents were, up from 54 percent in 2020 and back to the pre-pandemic level from 2019. Twenty-one percent thought they were worse off than their parents were at the same age.

People holding at least a bachelor's degree were more likely to experience upward economic mobility, relative to those with less education. This is particularly true among first-generation college graduates, among whom 70 percent thought they were better off financially than their parents were.¹⁵

Local and National Economic Conditions

Along with questions about their own financial circumstances, people were asked to rate their local economy and the national economy as "excellent," "good," "only fair," or "poor." The share of adults rating their local economy favorably increased from 2020 to 2021. Forty-eight percent of adults rated their local economy as "good" or "excellent" in 2021, with the rest rating conditions as "only fair" or "poor." This share was up from 43 percent in 2020, but well below the 63 percent of adults who rated their local economy as "good" or "excellent" in 2019, before the pandemic.

This pattern was generally similar across racial and ethnic groups, with higher shares rating their local economy favorably relative to 2020 but still below the share from 2019 (table 2). One exception was Black adults: the share of Black adults rating their local economy favorably increased 10 percentage points from 2020 to 2021, and was much closer to the pre-pandemic level than for other groups. However, Black and Hispanic adults remained the least likely to report that their local economy was faring well.

Table 2. Self-assessment of the local economy as good or excellent (by race/ethnicity and place of residence)

People's perceptions about their local economy diverged in 2021 for metro and non-metro areas. While perceptions of the local economy improved for residents of metro areas, perceptions ticked down 1 percentage point for those in non-metro areas. Additionally, the 34 percent of non-metro residents who rated their local economy as "good" or "excellent" remained far below the 53 percent that did so in 2019.

Similar to people's perceptions of their local economy, the share rating the national economy favorably fell precipitously from 2019 to 2020, after the onset of the pandemic (figure 7). However, people's perceptions of the national economy continued to decline in 2021. Only 24 percent of adults rated the national economy as "good" or "excellent" in 2021, down 2 percentage points from 2020 and about half the rate seen in 2019. This trend contrasts starkly with people's increasingly favorable assessment of their own financial well-being.

Overall Life Satisfaction

In addition to questions on financial well-being, the 2021 survey included a question on overall life satisfaction to provide a broader look at how people were faring. Respondents rated how satisfied they were with life as a whole on a scale from 0 to 10. Fifty-eight percent of adults reported "high" life satisfaction (rating 7 to 10), 30 percent reported "medium" life satisfaction (rating 4, 5, or 6), and 11 percent reported "low" life satisfaction (rating 0 to 3).

Life satisfaction was strongly associated with income. Nearly three-fourths (73 percent) of adults with family income of $100,000 or more reported high life satisfaction, compared with 41 percent among those with family income less than $25,000. Differences by education were also large, as were those by disability status and LGBTQ+ status (table 3).¹⁶

Differences in overall life satisfaction by race/ethnicity, on the other hand, were small. The shares of White, Black, and Hispanic adults reporting high life satisfaction were all within 2 percentage points of the share doing so for the overall population. Asian adults exhibited the largest difference from the overall population, with 63 percent reporting high life satisfaction.

Table 3. Share of adults with high life satisfaction (by demographic characteristics)

 

References

 2. The survey was fielded in October and November 2021 and results reflect financial situations at that time. References to "in 2021" refer to the 12-month period before the survey rather than the precise calendar year. Return to text

 3. The American Rescue Plan Act of 2021 became law in March 2021 and provided additional relief to most households to address the continued impact of the COVID-19 pandemic; see https://www.congress.gov/bill/117th-congress/house-bill/1319 and https://www.whitehouse.gov/wp-content/uploads/2021/03/American-Rescue-Plan-Fact-Sheet.pdf. Return to text

 4. More details on the enhanced CTC are available from U.S. Department of the Treasury, "Child Tax Credit," https://home.treasury.gov/policy-issues/coronavirus/assistance-for-american-families-and-workers/child-tax-credit. Return to text

 5. Results in earlier years were updated for consistency with 2021 methods for classifying education status so may differ slightly from earlier reports. Return to text

 6. See Economic Well-Being of U.S. Households in 2020, https://www.federalreserve.gov/publications/files/2020-report-economic-well-being-us-households-202105.pdf. Return to text

 7. The reported categorizations reflect the largest statistical groupings but are neither exhaustive nor the only distinctions important to understand. Sample sizes for other racial and ethnic groups and subpopulations are not large enough to produce reliable estimates. Asian adults were separately identified for the first time in the survey in the Economic Well-Being of U.S. Households in 2020, and in 2021 the Federal Reserve Board identified Asian adults in earlier years of the survey. However, results for Asian adults are sometimes excluded when the sample size is insufficient to provide a reliable estimate. Return to text

 8. Neighborhood income is defined using the Community Reinvestment Act definition. Under this definition, low- and moderate-income refers to communities that have a median family income of less than 50 percent of the area median income. For details on the definition, see https://www.federalreserve.gov/consumerscommunities/cra_resources.htm. Return to text

 9. Non-metro areas are defined throughout this report as being outside of a Metropolitan Statistical Area (MSA), and metro areas are those inside of an MSA, as defined by the Office of Management and Budget. This definition differs from the Census Bureau's definition of urbanized areas. For details, see U.S. Census Bureau, "2010 Urban Area FAQs," https://www.census.gov/programs-surveys/geography/about/faq/2010-urban-area-faq.html. Return to text

 10. For example, see U.S. Census Bureau, "Household Pulse Survey Shows LGBT Adults More Likely to Report Living in Households with Food and Economic Insecurity than Non-LGBT Respondents," https://www.census.gov/library/stories/2021/08/lgbt-community-harder-hit-by-economic-impact-of-pandemic.html. Return to text

 11. Survey respondents could report their sexual orientation and gender identity on a demographic profile survey previously conducted by the survey vendor. Respondents are classified as LGBTQ+ based on responses to these questions. Return to text

 12. Differences in financial well-being between adults identifying as LGBTQ+ and other adults were present across age groups. For example, only 58 percent of LGBTQ+ adults ages 45 to 54 were doing at least okay, compared with 75 percent among all adults in that age group. Return to text

 13. Disability status is defined based on a five-question functional limitation sequence that asks about hearing, vision, ambulatory, self-care, and independent living difficulties. This approach for determining disability status is similar to the six-question sequence used for the American Community Survey (see U.S. Census Bureau, "How Disability Data Are Collected from the American Community Survey," https://www.census.gov/topics/health/disability/guidance/data-collection-acs.html). Return to text

 14. A subset of respondents completed both the 2020 and 2021 surveys. Combining the one-year change in well-being results in the 2020 and 2021 surveys for these repeat respondents leads to similar results. Twenty-four percent reported that their financial well-being declined in one year and did not improve in the other, while 34 percent indicated that their well-being improved in one year and did not decline in the other. The remaining 43 percent either said their well-being was about the same in each year (35 percent) or had an improvement in one year and a decline in the other (7 percent). Return to text

 15. First-generation college graduates are those who have at least a bachelor's degree and who report that neither of their parents completed at least a bachelor's degree. Return to text

 16. The scales used to measure life satisfaction and financial well-being are not directly comparable. Return to text

* The Federal Reserve revised this report on February 2, 2023. “At least doing okay financially (by demographic characteristics),” “LGBTQ+ status was first identifiable in the 2020 survey” was corrected to “LGBTQ+ status was first identifiable in the 2019 survey.