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Most people have an idea of what wealth is in their heads. While wealth perception is a personal matter, new findings from Charles Schwab’s 2024 Modern Wealth Survey show it takes more money than ever to achieve wealth. This year’s study shows that Americans now think $2.5 million in net worth is the magic number for wealth, up 14% from last year’s $2.2 million.
Wealth perception varies by age, possibly because people amass more wealth as they age. The study showed that Baby Boomers believe $2.8 million is the wealth threshold, followed by Gen X with $2.7 million. Millennials think wealth starts at $2.2 million, and Gen Z sees wealth kicking in at just $1.2 million.
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The perceptions of financial comfort differ as well. Americans say the average net worth required to be financially comfortable is $778,000, down from $1 million last year. Gen Z sets the bar quite a bit lower at $406,000.
“Wealth means different things to different people, whether it’s financial freedom, enriching experiences with friends and family, or a certain dollar amount,” said Rob Williams, CFP®, managing director of financial planning at Charles Schwab.
What it means to be wealthy also depends on where you live. Median income and home prices factor into how people perceive wealth. It’s no surprise that in California, home to many of the country’s priciest real estate markets, people think it takes more money to be wealthy. In San Francisco, those surveyed reported that wealth starts at $4.4 million in net worth, 43% higher than the rest of the country. In Southern California, the average net worth for wealth was $3.4 million, 26% higher than the national average. According to the survey, the bar is set at $1.5 million to be financially comfortable in San Francisco. It is $1.2 million in Southern California. The rest of the country is below the $1 million mark for financial comfort.
Those who want to feel wealthy may want to consider Dallas. Dallas had the lowest wealth perception among Schwab’s top metro areas surveyed. In Dallas, you need $2.2 million in net worth to be wealthy. The market with the lowest threshold for financial comfort was Phoenix, with $650,000.
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Is It Enough?
People see wealth as attainable; 10% of those surveyed said they are wealthy now, and 21% believe they can achieve it in their lifetime. As every investor knows, time is the greatest gift for building wealth, and it’s no surprise that both Gen Z (29%) and Millennials (28%) were most optimistic about achieving wealth in their lifetimes.
A study from Bankrate showed that Americans said they needed $186,000 a year, on average, to live comfortably well above the current annual wage. To be rich, you need to earn at least $520,000. A separate survey from Northwestern Mutual found that people need $1.46 million to retire comfortably, an increase of 15% year over year and up 53% from 2020.
Surveys are interesting to read, but they are no substitute for doing your own financial planning to find what number is right for you. Having an investment target for retirement, sending children to college, or charting your path to financial freedom depends on a variety of factors. The core take-away from all of these surveys is that as costs rise, what we need to have to feel secure is going to increase, too. It’s another reminder that investing and getting the benefit of compound interest is crucial for a healthy financial future.
This article Want To Be Considered Wealthy? Schwab Survey Shows Where You Live Matters originally appeared on Benzinga.com
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