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How Much Money Does It Take to Be Wealthy?

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What You Need to Know

  • The average net worth Americans consider wealthy dropped nearly 27% from 2020.
  • Advisors said financial freedom, rather than a specific dollar amount, makes a person wealthy.
  • Americans are reprioritizing mental health and relationships.

It takes $1.9 million in net worth to be “wealthy,” according to Charles Schwab’s annual Modern Wealth Survey. That’s a drop of nearly 27% from 2020.

But there’s far more to wealth than money, survey respondents said, and advisors agree.

“Many of the most financially rich people are driven by forces that limit their ability to ever feel wealthy,” Joe Duran, head of Goldman Sachs Personal Financial Management, tweeted. “Sad but true. Wealth is a state of mind that for many implies safety and freedom. Very few ever feel it, rich or poor, because money can’t do that for you.”

We asked advisors and others on Twitter what wealth meant to them. One user said “5x of what you have,” while another cited the ability to pass money to the next generation.

But most responses centered around financial freedom, or as Barry Ritholtz, chairman and chief investment officer of Ritholtz Wealth Management, summed up:

The respondents to the Schwab survey reconsidered the average net worth it takes to be “wealthy” in 2021, to achieve “financial happiness” and to be “financially comfortable.” Schwab compared the findings in its new survey with those in its 2020 survey, which was fielded before the pandemic broke out:

  • To be wealthy: 2021 – $1.9 million; 2020 – $2.6 million
  • For financial happiness: 2021 – $1.1 million; 2020 – $1.75 million
  • To be financially comfortable: 2021 – $624,000; 2020 – $934,000

The pandemic has refocused many Americans’ priorities and changed their perspective on what it takes to be wealthy, according to the survey.

Fifty-three percent of respondents said they were financially affected by the pandemic over the past year. Some saw their finances strained by the economic environment, others faced a salary cut or reduced hours or were laid off or furloughed.

Now, 68% of respondents say they have reprioritized what matters most to them: Mental health is more important than it was before, followed closely by relationships, financial health and physical health. 

Post-Pandemic Optimism Emerges

These findings come at a time when a majority of Americans say they are optimistic about the state of the country overall and their personal financial prospects.

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Sixty-one percent of respondents in the Schwab survey said they were optimistic about the U.S. stock market, and more than half felt optimistic about the country’s job market and economy and its role as a global economic power.

As the country begins to reopen, 47% of survey participants said they were looking to get back to living and spending as they did before the onset of the pandemic, and 24% said they were eager to indulge even more to make up for lost time. 

Traveling and socializing top their post-pandemic to-do list, with many planning to splurge on a vacation, dine out at a fancy restaurant or host a party. 

“While COVID-19 upended nearly every corner of American life, many are starting to see the light at the end of the tunnel and are ready for a reset,” Charles Schwab’s head of investor services, Jonathan Craig, said in a statement. 

“But we’re also seeing a healthy balance — even as many people are eager to get out to spend, they also want to nurture newfound, healthy savings and investing habits developed over the last year, and it seems that will be an ongoing marker of this next chapter.” 

Logica Research conducted the online survey among a sample of 1,000 Americans age 21 to 75.

Katie Rass contributed to this report.

Photo: Adobe Stock

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