The Wealth Index Survey
Depends on whom you ask, and where they live, but the average response from a recent survey pegs the number at north of $1 Million. While answers ranged from $100,000 to more than $10 million, the most popular response, to “How much money to you need to be wealthy in America” as chosen by 26 percent of respondents, was at least $1 million
In terms of earnings , “less than one-fourth of 1 percent of Americans earn at least $1 million a year.” By contrast, a salary of $100,000 a year “means that you are annually making more than 87.9 percent of Americans.”
According to the results from the second annual Modern Wealth Index survey by Charles Schwab, to be financially comfortable in America today requires an average of $1.4 million – up from $1.2 Million a year ago. In a survey of 1000 Americans between the ages of 21 and 75, in order to be wealthy the net worth required was $2.4 million,
The survey found that in order to be wealthy in San Francisco, you need a net worth of $4.2 million and in New York you need $3.2 million. But in Charlotte, North Carolina, that number drops to a net worth of $1.8 million. To be a part of the top 1 percent of earners in the country, a household must bring in at least $389,436 annually.
Generation Gap
There were some positive signs amid the numbers. While 18 percent defined wealth as being able to afford anything they desired, 17 percent said it was “loving relationships with family and friends. Money is a resource that lets you have choices, and it is important to keep the important things in life important and not lose sight of real wealth of family, friends and good health. 60% of those surveyed said that they lived paycheck to paycheck reflecting the fragility of their financial situation and how close they are to a bankruptcy in the event of a protracted loss of job or a major medical event.
Millennials displayed some youthful optimism when it came to their financial future. Some 64 percent of twenty- and thirty-somethings believe they’ll be wealthy at some point in their lives, compared with 22 percent of boomers. Maybe better financial habits will help that happen, since more millennials than boomers said they regularly rebalance their portfolio—49 percent compared with 43 percent, respectively. The same percentage of millennials and boomers, 24 percent, felt “very confident” about reaching financial goals.
In line with many other surveys put out by financial services firms, the Schwab survey stresses how people who have a written financial plan feel more stable and are more on top of their daily finances. Some 52 percent of boomers, however, said they didn’t have a plan because they didn’t have enough money to need a plan.
The survey found that the American Dream is not all about money. More than 62% of the respondents stated that true wealth comprises of spending time with family, while 49% believe that owning a home is important for a rich life.
The survey found that the American Dream is not dead, at least the one that dictates that making money is indeed the path to bliss. Some 49 percent of respondents said that saving and investing is “the key to wealth,” with another 40 percent choosing “hard work.”
If you are a millennial who is justing starting your career or you are in the middle of your career and would like to catch you on your financial goals , follow the five simple rules for financial freedom.
Five Simples rules for Financial Freedom.
- Spent less than you earn. More material goods does not result in more happiness.
- The joneses are living a lie. Do not compete with them.
- Do not take on avoidable debt. Pay off high interest debt.
- Pay yourself first. Take full advantage of tax advantaged investments – 401K/403B/IRA etc.
- Investing is simple. Do not get confused by complex investment products and promise of market beating returns. Invest in lost cost index funds .
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“This post was originally published in July 2018”