Board of Governors of the Federal Reserve System

Overall Financial Well-Being

The share of adults doing at least okay financially fell sharply in 2022 and was among the lowest observed since 2016.² This decline in financial well-being occurred broadly across the population. Notably, it was the first time since the survey began that adults with at least a bachelor's degree saw a decline in well-being. Even so, existing gaps by education and by race and ethnicity remained large.

Current Financial Situation

At the end of 2022, 73 percent of adults were doing at least okay financially, meaning they reported either "doing okay" financially (39 percent) or "living comfortably" (34 percent). The rest reported either "just getting by" (19 percent) or "finding it difficult to get by" (8 percent).

The 73 percent of adults doing at least okay financially in 2022 was down 5 percentage points from 2021 and was among the lowest observed since 2016 (figure 1). As further evidence of declining financial well-being in 2022, the share of adults who said they were living comfortably fell 5 percentage points. This decline in well-being may reflect the broader economic conditions in 2022, such as inflation and stock market declines. It also occurred despite a strong labor market.

As in past years, adults with at least a bachelor's degree were much more likely to be doing at least okay financially (88 percent) than those with less than a high school degree (49 percent). That said, the gap in well-being between these groups has declined 6 percentage points since 2020 (figure 2).

The shrinking education gap in well-being marks a change from recent years and largely reflects a decline in well-being among those with at least a bachelor's degree. In fact, for the first time since the survey began in 2013, well-being fell among adults with at least a bachelor's degree, down from 91 percent doing at least okay in 2021. In contrast, well-being among those with less than a high school degree has generally remained flat in recent years.

Differences in financial well-being across racial and ethnic groups persisted in 2022. Eighty-four percent of Asian adults were doing at least okay financially, followed by 77 percent of White adults, and 64 percent of both Hispanic and Black adults (figure 3).³

All racial and ethnic groups measured in the survey saw a decline in financial well-being over the prior year. Well-being among Asian, Hispanic, and Black adults returned to the same level as in fall 2020, during the first year of the pandemic. Notably, well-being among White adults fell for the first time since the survey began, down 4 percentage points to 77 percent.

Parents are one group that has seen large swings in well-being in recent years, falling sharply after the onset of the pandemic, rebounding in 2021, and falling again over the prior year. The share of parents doing at least okay financially fell to 69 percent in 2022, down from its peak of 75 percent in 2021 (figure 4). For additional discussion of this decline in parents' financial well-being in 2022, see the "Expenses" section of this report.

Financial well-being continued to differ by income, LGBTQ+ status, disability status, metropolitan status, and neighborhood income (table 1).⁴ Fifty-four percent of adults with family income less than $25,000 were doing at least okay financially, compared with 93 percent of adults with family income greater than $100,000. While all income groups saw declines in well-being, those with family income between $25,000 and $99,999 saw the largest declines.

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

Earlier research has shown that LGBTQ+ adults were more likely to face economic insecurity, suggesting LGBTQ+ status may be associated with financial well-being.⁵ Consistent with this evidence, the 2022 SHED found that 65 percent of adults identifying as LGBTQ+ were doing at least okay financially, compared with 75 percent of those not identifying as LGBTQ+.⁶ Moreover, an even lower 55 percent of transgender or nonbinary adults were doing at least okay financially.

Finally, 56 percent of adults with a disability were doing at least okay financially, markedly lower than adults without a disability.⁷

Changes in Financial Situation over Time

The survey also measures 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 have felt worse off financially than they were a year earlier, for instance, even if they felt they were still doing okay overall (or that their financial well-being was improving even if they were still struggling overall).

The share of adults who said they were worse off financially than a year earlier increased sharply from 20 percent in 2021 to 35 percent in 2022, the highest level since the question was first asked in 2014 (figure 5). The share doing about the same as a year earlier fell 8 percentage points to 46 percent, while the share who said they were better off fell 6 percentage points to 19 percent.

The spike in those doing worse off financially occurred across demographic groups, though adults with higher levels of education saw the largest change. Thirty-one percent of those with at least a bachelor's degree said they were worse off financially than a year ago, up from 13 percent in 2021 and 10 percent in 2019, before the pandemic. This pattern may reflect the fact that those with bachelor's degrees not only faced rising prices but, because they are more likely to have exposure to the stock market, may have also been more affected by stock market declines.⁸

That said, those with lower levels of education continued to be the most likely to say they were doing worse off than a year ago. In 2022, 40 percent of adults with less than a high school degree reported doing worse off financially. The share was up from 33 percent in 2021 and was more than double the 18 percent seen in 2019, before the pandemic.

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 generations shows evidence of economic progress over time, despite financial setbacks during the pandemic. A majority of adults (54 percent) thought they were better off financially than their parents had been. This compares with the 57 percent who thought so both in 2021 and in 2019, before the onset of the pandemic. Nearly one-fourth thought they were worse off than their parents were at the same age in 2022.

People holding at least a bachelor's degree were more likely to experience upward economic mobility, relative to those with less education. This was particularly true among first-generation college graduates—those who completed a bachelor's degree and whose parents did not—among whom 69 percent thought they were better off financially than their parents were.

Main Financial Challenges

The survey further explored financial well-being by posing an open-ended question asking people about their main financial challenges or concerns.⁹ The responses were classified into broad categories based on keywords or phrases.¹⁰ Inflation was the most common challenge, with one-third classified into that category, followed by general needs, retirement and savings, and housing (figure 6). Twenty-eight percent said they did not have any financial challenges or concerns.

When describing challenges related to inflation, many people mentioned the cost of food, gas, and utilities. For example, one respondent stated that "energy costs, grocery costs, gasoline: everything we buy now has increased drastically."

Others noted that, while prices have increased, wages have often not kept up. This sentiment was expressed by one respondent who said that "prices [are] going up but our paychecks don't. [It is] hard to afford what we need and our kids need." This concern is consistent with those adults who said their spending had increased, but their income had not (see the "Income" section of this report).

People also expressed concerns about saving for retirement. For example, one respondent said, "Not able to save enough for retirement. My 401K and IRA have lost a significant amount of money. I won't be able to retire as initially planned." Concerns about retirement savings are consistent with the finding that just 31 percent of non-retirees think that their retirement savings are on track, as discussed in the "Retirement and Investments" section of this report.

The 2016 survey also included the same open-ended question about financial challenges, allowing for comparison of people's main financial challenges over time (figure 6). In 2016, 53 percent of adults said they did not have any financial challenges or concerns, much higher than the 28 percent who said so in 2022. People were much less likely to mention challenges related to inflation in 2016, consistent with macroeconomic trends at that time.¹¹ They also were less likely to mention general needs. Incidence for most of the other categories was generally similar in 2016 and 2022.¹²

Inflation was the most common challenge among people of all income levels in 2022, suggesting a widespread effect of higher prices across the population (figure 7).¹³ The prevalence of other challenges varied by income. For example, higher-income adults were more likely than lower-income adults to mention financial challenges related to retirement—and this was the case regardless of age—while lower-income adults were more likely than higher-income adults to mention general needs and employment.

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." Thirty-eight percent of adults rated their local economy as "good" or "excellent" in 2022, down from 48 percent in 2021, and well below the 63 percent of adults who rated their local economy as "good" or "excellent" in 2019, before the pandemic.

Declines in people's perceptions about their local economy occurred across census region and metropolitan status (table 2).

Table 2. Self-assessment of local economy as good or excellent (by census region and metropolitan status)

People's perception of the national economy continued to decline. The share rating the national economy as "good" or "excellent" fell to 18 percent in 2022, the lowest share since the survey began asking this question in 2017. Moreover, this share has fallen a substantial 32 percentage points since before the pandemic in 2019, when one-half of adults rated the national economy as "good" or "excellent" (figure 8).

In contrast, people's perception of their own financial well-being was down 2 percentage points since 2019. As a result, the gap between people's perceptions of their own financial well-being and their perception of the national economy has more than doubled in recent years, widening from 26 percentage points in 2019 to 55 percentage points in 2022.

 

References

 

 2. The survey was fielded in October 2022, and results reflect financial situations at that time. Results typically capture financial experiences at the time of the survey or in the 12-month period before the survey rather than the precise calendar year. Results discussing the period shortly after the onset of the pandemic are based on the two supplemental surveys were fielded during the pandemic in April 2020 and July 2020. Return to text

 3. 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. Additionally, results for Asian adults are sometimes excluded when the sample size is insufficient to provide a reliable estimate. Return to text

 4. 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 80 percent of the area median income. For details on the definition, see Board of Governors of the Federal Reserve System, "Community Reinvestment Act (CRA) Resources," https://www.federalreserve.gov/consumerscommunities/cra_resources.htm. Return to text

 5. For example, see Thom File and Joey Marshall, "Household Pulse Survey Shows LGBT Adults More Likely to Report Living in Households with Food and Economic Insecurity than Non-LGBT Respondents," America Counts: Stories Behind the Numbers (Suitland, MD: U.S. Census Bureau, August 11, 2021), https://www.census.gov/library/stories/2021/08/lgbt-community-harder-hit-by-economic-impact-of-pandemic.html. Return to text

 6. 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. Differences in financial well-being between adults identifying as LGBTQ+ and other adults were present even after controlling for age. Return to text

 7. 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

 8. For example, adults with over $1 million in savings or investable assets had a far larger increase in their likelihood of saying they were worse off than was seen among those with under $50,000 of assets. Return to text

 9. The question text is as follows: "In a couple of words, please describe the main financial challenges or concerns facing you or your family. If none please click the "None" box." Seventy-one percent of respondents provided a text response to the question, and 27 percent selected "None." The remaining 2 percent of respondents who did not provide a text response and did not check the "None" box were excluded from the analysis. Return to text

 10. Text entries were categorized based on words or word stems included in the response. "Inflation" includes responses with inflat, cost, pay more, paying more, increas, expensive, price, pricing, higher, rising, skyrocket, sky rocket, going up, gone up. Those with bill, util, electric, heat, everything, necessities, basic needs, essential, can't afford, not enough, get by, getting by, surviv, struggl, no money, challenge, living expense, or food were categorized as "general needs;" those with retire, 401k, stock, market, portfolio, pension, old age, Medicare, SSI, IRA, 401(k), Social Security, save, saving, or fund were categorized as "retirement and savings;" those with hous, rent, home, or mortgage were categorized as "housing;" those that mentioned work, job, wage, employ, raise, paycheck, pay check, salary, laid off, part time, hours, full time, overtime, skills, or unemp were categorized as "employment;" those with medical, medicine, health, Medicaid, Medicare, dental, dentist, cancer, sick, ill, doctor, hospital, or prescription were categorized as "medical;" those with credit, loan, debt, or owe were categorized as "debt;" those that mentioned college, school, education, tuition, degree, university, or student were categorized as "education." Responses may be included in multiple categories or no categories, as the categories are neither exhaustive nor mutually exclusive. Return to text

 11. In 2016, no respondents directly mentioned the word "inflation" as a financial challenge, instead mentioning things like an increasing cost of living or rising prices. Return to text

 12. The specific challenges and concerns within the broader categories may have changed from 2016 to 2022. Return to text

 13. In part, the lower share reporting inflation concerns among the lowest income group may reflect the different terms people use to describe their finances—as evidenced by the higher share citing general needs. It also partially reflects somewhat more respondents in that income group selecting "none," which may be a form of non-response to the open-text question. Return to text