While Americans’ say you need $2.2M to “be wealthy” in 2023, Americans who feel wealthy have a much lower actual net worth.
The Charles Schwab Modern Wealth Survey 2023 provides some insight on how American view wealth – not very accurately in my opinion.
Net worth is the value of everything you own minus what you owe. If you own a home as your only asset and it is worth $500,000, (could sell for) but your mortgage is $350,000, your net worth is $150,000.
48% of Americans say they feel wealthy, but their average net worth is only $560,000, a far cry from the $2.2 million most say you need. Then the survey veers in another direction.
Americans feel having time is more important than money
Americans generally choose non-financial assets when better describing wealth – like healthy relationships and work-life balance.
Of course, there are many things more important than money and surely many financially wealthy people aren’t very happy, but let’s stick to the money part of wealth.
Money may not buy happiness, but it is necessary to avoid stress and perhaps misery – always, but especially in retirement.
If you have a couple of million dollars in investments, you are wealthy. If that amount includes you home, your cars, etc. you are not wealthy.
In addition, being wealthy is not just net worth, it is income as well. The income from investments of $2 million will not give you a wealthy lifestyle, but if you are retired it can give you an income far above most retirees (median income for those 65 and older $47,620) even if you don’t feel wealthy.
The average person aged 65-74 has $1,217,700 in net worth. The median net worth is $266,400. People 75 and older have a slightly lower average net worth of $977,600. Their median net worth is $254,800. (Source: CreditDonkey)
QUINNSCOMMENTARY 
Averages are deceiving and misleading:
Age Median Average
55–64 years old $212,500 $1,175,900
65–74 $266,400 $1,217,700
75 years or older $254,800 $ 977,600
Median – half have more, half have less.
13 – 14 Million American families have a NEGATIVE net worth.
Elon Musk net worth – $250+ Billion. That raises up a lot of folks from being in debt to be zeroes.
As an indicator of income as wealth, consider Social Security (as promised, not as funded). Social Security wealth increased substantially from $3.4 trillion in 1989 to $37.2 trillion in 2019 and is now 57% of the wealth of the bottom 90% of the “wealth” distribution.
Social Security income represents 50% or more of a lot of retirees’ income.
So, given that Social Security and Medicare are not funded in a way to be sustainable (exhaustion in 2033, 2030 respectively), that’s a first order risk for almost everyone age 55 or older.
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Be very careful.
Staggering is a word you don’t get to use often, but the difference between “average” and “median” can be staggering, yet I have seen several news articles where they are used interchangeably.
I argued with someone on line (hard to believe, I know) because he used the term “median per capita” income. “Per capita” is by definition “average” so median per capita is a contradiction in terms. Although I have seen that term used in various articles.
Even then, if you want serious comparisons, you have to read the fine print. GDP per capita is total production divided by total population. GNI per capita (Gross National Income), according to an article I just read, is total income divided by total population over 15. Big difference.
It’s easy to get misleading information, either intentionally or accidentally.
Just curios, in looking at per capita GDP , not surprised that Luxembourg, Switzerland, and Qatar have higher GDP than the U.S., but Ireland? What’s up with that?
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I was under the impression that per capita was “per household”, which puts an entirely different spin on things.
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Per person. “Per capita is a Latin term that translates to “by head.”
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As in head of household.
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Guess not
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I suppose age has a lot to do with feelings about wealth and value of time. If you are 28 and have 560k accumulated, you can feel wealthy because you feel the future will bring more and relative to peers you are wealthy. If you are 68, 560k is keeping you going but wealthy isn’t in the picture. Time isn’t on your side either.
The disconnect I see is people don’t try to add more annually to their net worth. The savings and investing rates are low. They talk about wealth and time and then save 5% annually. The result will be they will have neither wealth or time because they will be chained to a job.
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I agree that the survey is not a good way to determine who is wealthy. For me, I would consider myself wealth if I could spend money on things that I do not need without financing any of it. If I want a new boat, I’ll go buy it. I could sail around the world without worrying about the bill. A second house, boom, I’d go and buy it. Buy a $4500 bottle of bourbon, I could do it. I also could buy the latest fancy Ford pickup at $100K.
The flip side to financial security is if I worry about how to keep the lights on. Do I need to put that on my credit card or do I need to get a payday loan to eat? How will I get my brakes fixed on my car?
Today, I think that I am just shy of being wealthy. I can pay cash for everything I need. I have money in the bank. I can get my car fixed without worrying how to pay for it. I can get reasonable things I want, say a $150 bottle of bourbon once in a while. Or I can go out to dinner anywhere I want. The reason I say, just shy of being wealthy is I do have to think about how many times I go out to dinner per week. I wait until my car needs to be replaced instead of getting a new one just because. I spend my money wisely instead of impulse buying.
I do not think the your net worth determines your wealth but the lack of debt determines your wealth. The price of the toys is not a measure of wealth, just how expensive they are.
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