Amid ongoing inflation, the definition of wealthy individuals is on the rise. According to the annual “Modern Wealth Survey” by Charles Schwab, in the United States, one now needs to have at least $2.5 million in net assets to be considered wealthy.
This is a slight increase from last year’s survey result of $2.2 million. Net assets measure a person’s asset value (whether savings or home ownership) minus debts owed (such as loans or credit card debt).
However, in some of the most expensive cities in the U.S., having $2.5 million in net worth may still not make one feel wealthy enough. In San Francisco, local residents believe that an individual needs to have $4.4 million in net assets to be considered wealthy, topping the list among 12 major surveyed cities.
According to CNBC, Charles Schwab’s new annual Modern Wealth Report is based on a survey conducted in March with 1,000 Americans aged between 21 and 75.
Among the 750 San Francisco residents surveyed, only 16% stated that their financial situation is good, with most citing high living costs and exorbitant housing prices as the biggest obstacles to building more wealth.
Here are the net asset standards considered “wealthy” in 12 major U.S. cities based on survey samples of 500 to 750 participants in each city by Charles Schwab:
San Francisco: $4.4 million
Southern California (including Los Angeles and San Diego): $3.4 million
New York City: $2.9 million
Washington DC: $2.8 million
Denver: $2.8 million
Seattle: $2.8 million
Boston: $2.7 million
Atlanta: $2.4 million
Chicago: $2.3 million
Houston: $2.3 million
Phoenix: $2.3 million
Dallas: $2.2 million
The Modern Wealth Survey aims to study how Americans view savings, spending, investing, and wealth. This year marks the eighth time Charles Schwab has conducted this annual survey. The results show that over 60% of Americans believe they are more capable of achieving financial goals than previous generations. This optimism is most pronounced among the Baby Boomer generation, with 66% believing they are more likely to achieve their goals compared to the older generation. However, each generation surveyed showed similar confidence – Generation X (63%), Millennials (62%), and Generation Z (60%).
One factor driving this positive sentiment may be the increasing number of Americans investing in the stock market. The survey by Charles Schwab shows that nearly three-fifths (58%) of Americans are currently investing, consistent with recent data from the Federal Reserve, indicating they are investing through mutual funds, retirement accounts, or individual stocks. This figure from the Federal Reserve has risen from 53% in 2019 to the highest level on record.
When asked if they would become wealthy in their lifetime, 21% of survey respondents said they would.
It is worth noting that the term “wealth” means different things to different people. Rob Williams, a certified financial planner and managing director of financial planning at Charles Schwab, mentioned that for some, wealth may mean precious time spent with family and friends, while for others, it may be a specific “amount.”