Redefining Wealth: How Money, Meaning, and Life Goals Truly Connect

Open a magazine, leaf through social media, or turn on the news, and one sees a certain narrative about wealth: the largest paycheck, the flashiest house, the biggest name on the board. It makes for a simple story, one that is all too often mistaken for the truth. Income and net worth are easy things to measure, and a decent life is not, and people are much more loosely coupled than the culture suggests. Time, health, meaning, love, liberty, and the ability to make those things happen are all legitimate factors in a definition of wealth. Money may make all of those things possible, but it cannot take the place of any of them, and the evidence on just where that intersection occurs might be more nuanced and recent than you think.

The aphorism that money buys happiness only up to a certain point has seen so much repetition and been so frequently presented as unquestionable fact that it can seem like gospel. One wonders if people have actually read the studies on which they are based, because there is reason to believe that their conclusions are in dire need of nuance.

What those studies – specifically the work of Princeton's Daniel Kahneman and Angus Deaton, which initially drew the most press – actually say is that beyond roughly $75,000 per year, increases in income have no statistically significant effect on day-to-day emotional wellbeing, despite a continuing rise in general life satisfaction. The media drew from this the message that money cannot buy happiness, period, which misses the nuance that life satisfaction is indeed a factor that money can affect, if not one that it has an overwhelming impact on.

Meanwhile, in an equally reputable source, Wharton's Matthew Killingsworth published an article in 2021 showing no such threshold, using a sample size of over 450,000 people who tracked their happiness over the course of a month instead of the one day used in the "only 75K" study, and with no set spending brackets in sight. Two researchers, both credible, coming to entirely different conclusions: not unusual in the annals of science, but still worth taking notice of, specifically in the context of the intersection of money and happiness.

This brings us to the third act in the story: in 2023, Kahneman and Killingsworth have an unprecedented adversarial collaboration, with the help of a referee for the academic journal the paper is being submitted to, Barbara Mellers, and find some common ground in neither the exactness of the numbers nor the nuance of the implications. According to the PNAS article, the findings for most people seeing an increase in wellbeing with additional income persist beyond $100,000, while for the subset for whom happiness does level off, additional income brings no relief from misery. This is, in and of itself, an important reminder that money buys its own set of problems reliably, the resolution of which it alone cannot deliver. It is a message of balance: one that most people, in their attempts to maximize wealth, forget.

Saving money is a virtue, and one that most of the culture rightly expects from responsible adults and wrongfully demands from children and elderly. There is such thing as being overly focused on saving, and the manifestations of this problem tend to fall under two types: having an end goal in sight for one's wealth and delaying everything else until one reaches it, and viewing saving itself as a kind of virtue that other people ought to practice more. The former leads to the unfortunate realization that the end goal was never truly desired, while the latter tends to rear its ugly head when the need for money arises suddenly and there is none to be had.

One could make an analogy to health and caloric restriction here, with an overfocus on wealth leading to malnourishment the same way that an overfocus on calories leads to starvation. In both cases, money and calories are essential but should not be prioritized to the point of neglecting other necessities of life. Viewing them as tools to reach a better place in life rather than an end themselves rarely fails to benefit the pursuer. There are no hard numbers when it comes to the right balance between living for today and preparing for tomorrow, since different people may have entirely different visions for their life in retirement and entirely different sources of income to rely on, but there are a few basic principles that apply to most: saving should be an active effort to pursue one's goals rather than a passive result of a poorly thought out plan, and saving should be balanced against the need to enjoy one's life rather than put it on hold.

The issue of goals is not one of money, but one of values. For most people, there is a set of things that one would like to achieve, and the lack of means to fund any given achievement at a given moment serves as a convenient reason not to pursue it. One may have one's eye on a home, vacations, education, starting one's own business, financial independence from one's parents, or something else entirely, but unless one has a sense of priorities, one spends money on the easy things first.

The people who get ahead in all areas of life, it seems, are not those with the greatest income or the deepest understanding of finance, but those who know what they want and, on a smaller scale, understand what matters most to them at a given moment while pursuing that particular end. Financial progress rarely comes through dramatic leaps but through a series of small steps, each of which gets one closer to one's goal, and most of these steps are accessible to most people, if they can be identified. Keeping the big picture in mind while focusing on the little things is what makes the journey easy and the destination inevitable.

Tax-preferrred retirement accounts serve one purpose and one purpose only: to penalize present-day spending with additional taxation in order to reward patience with a smaller tax bill in the future. It makes them an excellent tool for long-term savings, the likes of which most people should utilize, at least to a small extent, if they plan to retire at some point. The IRS publishes figures that one is allowed to contribute to a 401(k) or an IRA, and those numbers are $24,500 for the former and $7,500 for the latter as of 2026, with higher limits for those contributing to the plans at work who are over age 50. Employer matches for contributions are also a type of free money, in the sense that if a worker does not save as much as they could, they are essentially giving away their company's contributions.

This does not mean that all money should go into these accounts and that they are the sole or best expression of one's financial goals, however. If one intends to use a certain amount before retirement, for a house, for a business, and for any other reason, it makes little sense to invest in a 401(k) that, upon early withdrawal, will fail to meet those needs. The general rule of thumb is to have a small amount in emergency funds, followed by the amounts needed to take advantage of employer-matching retirement accounts, and any other funds needed for personal savings in the present and retirement in the future.

Most people, when looking at their long-term prospects, significantly underestimate the length of their retirement. The average American used to retire at sixty-five, and at the turn of the twenty-first century, it was not unusual to expect to live for only twelve years after that. A sixty-five year old today, however, can reasonably expect to live for another twenty-three years, on average, if they are a woman, and twenty-one if they are a man. This is a substantial change from a generation ago, and a large part of the burden for funding it falls on the retiree, since the average Social Security benefit replaces only forty percent of one's preretirement income, and a pension is only available to people with a job that provided one.

Most financial planners will suggest that one should expect to live on anywhere between seventy and eighty percent of one's preretirement income in order to enjoy a similarly comfortable standard of living. This does not account for the fact that most Americans who retire will need some form of long-term care in their later years, as roughly seventy percent of Americans over the age of sixty-five will require it at some point.

When talking about retirement income, most people think of three general sources of income: Social Security, pensions, and personal savings. The last of those is a certainty for everyone, since they must fund their own retirement in large part, and the other two are only available to some people, namely those with jobs that offer them. Even so, most planners suggest that at best, Social Security will provide roughly fifty percent of one's preretirement income, and a pension will replace another twenty percent or so, with personal savings funding the remaining thirty percent. This is an oversimplification, since Social Security benefits tend to provide a larger replacement rate for lower earners and a smaller one for higher ones, but it serves to illustrate how much personal retirement income is needed to supplement one's other sources of income.

Falling behind on retirement savings, much like falling behind on schoolwork, is not something that should happen, but it is something that frequently does, and it does not always speak to one's character or even represent an irreversible setback. It does, however, have consequences, and it is important to understand what options there are to mitigate or eliminate them. One may need to reduce expenses, or work for a little longer, or receive raises and put them straight into savings until catches up with one's goals or the ability to save changes. There are also options, when one has more time, to put more money towards retirement, specifically once one reaches age fifty, when the IRS allows for additional savings to be made.

Financial planning, much like schoolwork, is always an ongoing process, and the most successful people rarely treat it, or their education, as a series of discrete milestones to be reached and gotten past. There is always more to learn, and one should always keep this in mind. If that sounds like a lot to take in, do not worry; there are always options, and it is never too late to begin. It always helps, of course, to begin earlier.

This article is for general educational purposes and isn't personalized financial or retirement advice. For decisions specific to your situation, consider talking with a licensed financial advisor.