How Much Money Equals Wealth?
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How much money do you need to have to be considered rich or wealthy?
The best answer is "it depends," on your definitions of rich and wealthy. Are they terms defined by one’s net worth, income, or overall wellbeing? Is the context local, national, or global? Depending on the definition, one could qualify as rich in one context and impoverished in another.
Charles Schwab's Modern Wealth Survey asked this question of 1,000 Americans between the ages of 21 and 75. The results, reported on July 27, 2020, in an article by Michael S. Fischer, are fascinating.
In 2019, the survey found it took a net worth of $2.3 million to be considered rich and $1.1 million to be financially comfortable.
In January of 2020, survey participants felt it took more money to be rich – $2.6 million – but less to be financially comfortable – $934,000. That was before the worldwide pandemic. Schwab surveyed participants again in June and found the bar had dropped substantially, with $2 million being rich and $655,000 being financially comfortable.
Why such a huge difference in six months? It could not have been a financial decrease. Someone with their investments in a diversified portfolio in January, when respondents said $2.6 million was rich, by June had only seen their portfolio decline by about 5%, or $130,000, to $2.470 million. The same ratio was true of the financially comfortable portfolio, which declined to $887,000.