How Do Americans Define “Wealthy”? You Might be Surprised
How much money would it take to consider yourself wealthy? $500,000? $1 million? $2 million? More?
Obviously, how we quantify what it is to be wealthy varies from one person to the next. But according to an annual survey by Charles Schwab, on average, Americans believe it takes $2.5 million of net worth to be considered wealthy. This is up $300,000 from last year’s survey. To be “financially comfortable”, Americans, on average, state they would need a net worth of $778,000. Net worth is defined as the value of all your personal assets, less any liabilities, such as credit card balances, your home mortgage and any auto and personal loans. It’s what you would have left if you sold all your assets and paid off your debt.
In their analysis, Charles Schwab suggests how we define “wealthy” and “financially comfortable” is heavily influenced by our age. According to their data, the older we are, the more money we typically need to meet that personal threshold.
Baby boomers (those born between 1948-1964) state they need $2.8 million to feel wealthy and $780,000 to feel financially comfortable. For Gen Xers (1965-1980), the threshold is $2.7 million and $873,000, respectively. For Millennials (1981-1996), it’s $2.2 million and $725,000. Finally, for Gen Zers (1997-2002), the threshold is $1.2 million and $406,000.
Another key factor is where you live. For residents of high-cost states or those who live in big cities, the amount of money required to make you feel wealthy or financially comfortable can be significantly more. For example, residents of San Francisco have a threshold of $4.4 million before they would consider themselves wealthy. This is 76% above the national average of $2.5 million. To feel financially comfortable, San Franciscans need $1.5 million, 93% above the national average of $778,000.
Overall, 10% of Americans currently consider themselves to be wealthy while 21% say they are on the right track. Gen Zers (29%) and Millennials (28%) are the most optimistic they can achieve this financial goal.
Americans say their biggest challenge to saving money and achieving their wealth goals is inflation. In its latest quarterly survey, Santander US notes that 81% of middle-income Americans consider inflation a major concern while 86% say it has impacted their daily lives. The national inflation rate has remained above the Federal Reserve’s 2% target rate for 46 consecutive months, dating back to February 2021. In June 2022, inflation reached a four-year high of 9%.
For most people, how we measure wealth often goes beyond a simple dollar-figure. As we analyze and chase down our financial goals, we need to consider the importance of family, friends, happiness and our health. These non-financial measures can often be the greatest wealth of all.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
