Most Americans say that to be considered “rich” in the United States in 2021, you need to have a net worth of almost $ 2 million – $ 1.9 million to be exact.
That’s less than the $ 2.6 million net worth of Americans cited as the threshold for being considered rich in 2020, according to Schwab’s 2021 Modern Wealth Survey.
Expectations of wealth also varied from generation to generation, with younger Americans saying they felt lower net worth could be considered rich.
Here is the net worth of each generation that indicates you must be considered rich in 2021:
- Millennials (24 to 39): $ 1.4 million
- Generation X (44 to 55): $ 1.9 million
- Baby boomers (56 to 74): $ 2.5 million
The drop in net worth expectations could be due to the Covid-19 pandemic, according to Schwab. More than half of the 1,000 Schwab survey respondents, 53%, said they had been financially affected in one way or another by the pandemic. About 1 in 5 say they have been laid off or on leave, while about 26% say their pay has been cut or their working hours have been reduced.
A drop in income can impact net worth, which is essentially a calculation of all of a person’s assets – including cash in checking and savings accounts, financial investments, and the value of any real estate. or owned vehicle – minus all debt, including credit card. balances, student loans and mortgages.
Yet even before the pandemic affected jobs, most Americans did not have a net worth of $ 1.9 million. Before the pandemic, American households had an average net worth of $ 748,800, according to the 2019 Federal Reserve Survey of Consumer Finances. The median or median net worth of all American households was much lower, just $ 121,700 in 2019.
It should also be noted that in order to be considered as part of the richest 1%, households need a net worth of over $ 11 million.
Everyone’s finances have not been negatively affected by the global health and economic crisis. Thanks to stimulus payments and reduced spending, some Americans actually increased their savings levels during the pandemic.
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No matter how your own net worth has changed over the past year, it’s probably worth taking the time to assess where you are now and start planning for the future, says Rob Williams , Vice President of Financial Planning at Charles Schwab.
“At Schwab, we talk about the importance of having a plan at times of significant change or transition in life, like getting married, changing careers or losing a loved one,” says Williams. “With the pandemic, we’ve all been through a major life event collectively, so it’s especially important to take the time to create a plan to help make sure your finances are on track and be prepared for anything. what will follow in your life.
According to Scwab’s survey, those who create a written financial plan generally have more savings and financial stability, as well as less credit card debt and late payments.
“We’ve spent much of the past year focusing on being successful today, but now we see an opportunity to look ahead and plan for tomorrow,” said Williams.
Editor’s Note: This story has been updated to include additional information.
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