The definition of being wealthy in America has been widely debated. According to a 2019 Modern Wealth Survey by Charles Schwab, the average net worth to be considered financially comfortable is $2.3 million. However, experts agree that the threshold is hard to quantify and differs based on location and personal situation. While surveys provide a numerical benchmark, intangible factors like peace of mind also contribute to feeling wealthy. Both tangible and intangible criteria impact whether someone is truly affluent.
Average net worth of $2.3 million marks start of wealth
The 2019 Modern Wealth Survey by Charles Schwab established $2.3 million as the average net worth to be considered wealthy. This finding is unsurprising to financial experts like Nick Giacoumakis, president of New England Investment & Retirement Group. However, this is not an absolute definition of affluence. Experts note factors like location significantly impact the wealth threshold. For example, $2.3 million net worth makes someone wealthy in New York City but not in the Midwest, according to Ed Mermelstein, a real estate attorney and developer. Defining wealth is complex, requiring consideration of income, assets, debts, and more.
Wealth depends on more than income and assets
Some people spend money lavishly on homes, cars, vacations, reducing their apparent net worth and income. Even high earners with little spending may owe student loans that lower assets. As Jeff Klauenberg of Klauenberg Retirement Solutions notes, wealth can be relative. To some, wealth means owning a home twice as expensive as their neighbor’s. Additionally, a seemingly high income in one region may translate to low purchasing power in another. Thus, income and assets alone do not fully capture one’s wealth.
Peace of mind contributes to wealthy mindset
When Klauenberg polls family, friends and clients on wealth, a common response is, “Wealthy is being able to do what you want.” While tangible benchmarks are important, intangible factors like peace of mind also influence feelings of wealth, though they are hard to quantify. The lifestyle you desire directly impacts your wealth requirements. But generally, living paycheck to paycheck doesn’t align with feeling wealthy, even with minimal material needs. As advisor Timothy McGrath notes, true wealth means having enough assets and net worth to maintain a certain lifestyle, even without income.
Wealth definition varies by individual
Surveys provide useful benchmarks, but wealth remains highly personal. The Modern Wealth Survey found that 8% of respondents considered themselves wealthy at just $700,000 in net worth – far below the $2.3 million average. America’s top 1% highest earners also set a high bar at $719,000 minimum annual income in 2017. Tax thresholds present a lower wealth picture. The top 35% tax bracket kicked in at $204,100 for single filers in 2019, and $408,200 for married joint filers. But tax breaks phase out at even lower income levels for individuals, indicating wealth in America depends very much on personal circumstance and perspective.
In the US, $2.3 million in net worth marks the start of wealth. But experts agree tangible assets alone do not define affluence. Intangible factors like peace of mind also contribute. With varying perspectives on the wealth threshold, definitions remain highly individualized.