What is “wealthy?” For many people, the definition of the term differs greatly. Some people strive to fill their 401ks or Roth IRAs as much as possible. Others just want to stop struggling to scrape by each month and consider having extra cash in savings to weather emergencies wealth, or at least comfort. And with those various perspectives, we all have our own idea of what being “wealthy” means. However, a new survey from Charles Schwab shows the pandemic has shifted the American’s definition of how much money someone has to be considered “wealthy,” and what someone would need to have in order to live comfortably.
The annual Modern Wealth Survey from Charles Schwab was released recently and it highlighted that the numbers associated with being wealthy have been shifting downward.
The report surveyed 1,000 people in the U.S who ranged in ages from 21 to 75 years old. The survey was done in February 2022, and it asked participants a variety of questions related to their personal finances. One of the more interesting takeaways from the survey is that the average net worth needed for someone to be considered wealthy is up from last year, but our definitions of wealth have changed amid the pandemic.
In 2020 (pre-pandemic), Americans reported that $2.6 million was needed in order to be considered wealthy, and $934,000 to be “financially comfortable.” Both numbers took a pretty big nosedive during the peak of the pandemic in 2021. The number needed to be considered wealthy dropped to $1.9 million and the “financially stable” metric dropped to $624,000.
This year, those numbers rose — Americans now believe that a net worth of $2.2 million is enough to be considered wealthy and $774,000 enough to be “financially comfortable — but are still lower than how Americans considered wealth prior to the COVID-19 pandemic. And according to Rob Williams, managing director of financial planning, retirement income, and wealth management at Charles Schwab, that’s because people aren’t focusing on the same financial goals from previous years. “People are concerned about other things besides the balance in their portfolio and in their investment account,” Williams said.
All of this is interesting given that the median net worth of Americans in 2019 was just $121,760, that the median net worth of Americans under 35 was $14,000, and for Americans between 35 and 44, $91,110. It shows just how far away Americans are from perceiving themselves as financially comfortable or wealthy, as well.
And why wouldn’t it? These past few years have been stressful for people in terms of finances and wealth—and some of those stresses point back to inflation and supply chain issues driving prices up. Poverty has risen, the cost of groceries has skyrocketed, store shelves are bare where things like baby formula should be, and the number of affordable houses on the market at any given time is at a significant low.