Feeling ‘financially comfortable’ is not quite as uncomfortable as it used to be for Americans, according to new data from Charles Schwab.
While Charles Schwab’s 2024 Modern Wealth Survey found that Americans think they’d need a net worth of $2.5 million to be considered “wealthy”—which is up from $2.2 million in each of the past two years—Americans actually cut back significantly on what they think it takes to feel “financially comfortable.”
The average net worth required to be financially comfortable according to the 2024 Schwab survey is down to $778,000, after reaching a peak last year at $1 million. Schwab notes that this year, Americans’ estimations are more in line with 2022 ($775,000).
Schwab’s Moden Wealth Survey has analyzed data on Americans’ perspectives on saving, spending, investing, and wealth since 2017.
“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 William, CFP, managing director of financial planning at Charles Schwab. “Our survey reinforces that people with a written financial plan are more confident about achieving their personal financial goals. Financial planning helps people understand where they are today and create a roadmap to get where they want to be, whether someone is saving for a single goal, like retirement, or needs comprehensive planning and wealth management.”
By generation, Boomers have the highest threshold of what it takes to be considered wealthy, at $2.8 million, while the younger generations, Millennials ($2.2 million) and Gen Z ($1.2 million), have lower thresholds of what is considered wealthy. Gen X came in at $2.7 million.
As for being “financially comfortable,” Gen Xers think $873,000 in net worth is needed—much more than Boomers ($780,000), Millennials ($725,000) and Gen Z ($406,000).
Earlier this year, the Schwab 401(k) survey found workers think they need to save $1.8 million for a comfortable retirement, which is the same as last year. Earlier this year, a Northwestern Mutual study found Americans believe they need to save $1.46 million for a comfortable retirement.
Takes more in California
When it comes to geographic region, Californians have the highest threshold of what it takes to be wealthy, with San Franciscans saying it takes $4.4 million and Southern Californians indicating it takes an average net worth of $3.4 million.
New Yorkers think it takes $2.9 million to feel wealthy, followed by Washington D.C., Denver, and Seattle all at $2.8 million.
On the other end of the spectrum, survey respondents who live in Atlanta ($2.4 million), Chicago, Houston and Phoenix ($2.3 million) and Dallas ($2.2 million) express a lower threshold of what it takes to be wealthy when compared with the national average.
As for merely being “financially comfortable,” those in San Francisco say $1.5 million is needed ($3.4 million for Southern California) while Phoenix ($650,000) and Houston ($662,000) have lower thresholds.
1 in 5 feel on track to be wealthy
When asked if they think they will be wealthy within their lifetimes, 21% of Americans say they are on track to be wealthy. Younger Americans, including Millennials and Gen Z, are the most optimistic about being wealthy in their lifetimes (29%). In fact, 12% of Millennials and 10% of Gen Z say they’re wealthy now (compared to 8% of Boomers and 9% of Gen X).
Though they’re optimistic about their future wealth, respondents acknowledge that there’s more they can do, with fewer than one in five Americans (18%) saying that they are currently on top of their finances. Nearly one-third (32%) feel they are on track to being more on top of their finances and another one-third (34%) feel they need to make changes to feel more in control.
Americans generally give themselves passing grades when it comes to their personal finances, including how much they have saved, how much they have invested, and how prepared they will be for retirement. Notably, the grades are higher among those who have a financial plan in place.
The online survey was conducted by Logica Research from March 4, 2024, to March 18, 2024, among a national sample of 1,000 Americans aged 21 to 75. An additional 200 Generation Z Americans completed the study. Quotas were set to balance the national sample on key demographic variables. Detailed results can be found here.
SEE ALSO:
• Worker Retirement Confidence Improves: Schwab 401(k) Study
• $1.46 Million: New ‘Magic Number’ for a Comfortable Retirement
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
