Americans have apparently revised their perspectives on what it takes to be “wealthy” in the wake of the pandemic, if Charles Schwab’s 2021 Modern Wealth Survey is any indication.
The annual examination of how 1,000 Americans think about saving, spending, investing and wealth, released today, reveals Americans believe it takes an average $1.9 million in personal net worth to be considered wealthy in 2021.
While that’s still more than double the actual average net worth of U.S. households, it’s $700,000 below the $2.6 million bar set for wealth in Schwab’s 2020 survey, which was fielded before the pandemic outbreak.
Survey respondents also lowered the bar for what it takes to achieve “financial happiness” and to be “financially comfortable” in 2021:
- $1.75 million: Average net worth needed for “financial happiness” in 2020
- $1.1 million: Average net worth needed for “financial happiness” in 2021
- $934,000: Average net worth it took to be “financially comfortable” in 2020
- $624,000: Average net worth it takes to be “financially comfortable” in 2021
Optimism on the rise
Despite lowering their standards for “wealth,” as vaccination rates rise and restrictions ease across the country, the Schwab survey found a majority of Americans feel optimistic about the state of the United States overall, including the economy, the stock market and even their personal financial prospects.
More than 60% of Americans surveyed are optimistic about the U.S. stock market, and more than half feel positive about the U.S. job market, economy and role as a global economic power.
As the country begins to reopen, nearly half (47%) of Americans are looking to get back to living and spending like they were before the COVID-19 pandemic, and almost a quarter (24%) say they are eager to indulge even more to make up for lost time. Americans are dreaming most about traveling (40%) and socializing (30%), with many planning to splurge on a vacation (24%), dine out at a fancy restaurant (21%) or host a party (15%).
“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,” said Charles Schwab senior executive vice president and head of Investor Services Jonathan Craig. “They plan to prioritize experiences and treat themselves after living constrained lives amid restrictions, quarantines and illnesses. 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.”
Nearly two-thirds (64%) of Americans surveyed say they were savers in 2020, as opposed to spenders. Hoping to double down on new savings habits in post-COVID life, 80% plan to be bigger savers than spenders in the year ahead, with nearly half (45%) planning to save more money and a third (34%) intending to reduce their debt once the pandemic has subsided.
In addition to balancing spending and saving, Americans are also taking a measured approach when it comes to their investments: 48% say they’re investing to increase savings in case of an emergency and 63% of investors consider emotional and financial risk tolerance when investing.
Recalibrating Priorities
The financial stress the pandemic imposed on Americans is clear. According to Schwab’s survey, more than half were financially impacted over the past year, whether the economic environment strained their finances (31%), they faced a salary cut or reduced hours (26%), or they were laid off or furloughed (20%).
Against this backdrop and as we usher in a new era, more than two-thirds (68%) of Americans have reprioritized what matters most to them, with 69% saying mental health is more important than it was before, followed closely by relationships (57%), financial health (54%) and physical health (39%).
“The past year has of course caused Americans to focus on their health, in particular their mental health, along with the health of their relationships,” said Charles Schwab vice president of financial planning Rob Williams. “But the pandemic and the significant impact it had on the economy and stock market also taught us a valuable, and in many cases difficult, lesson about the importance of financial health and preparedness, including the importance of having a plan and emergency savings.”
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.
