Most Americans say that to be considered a “rich man” in the United States in 2021, you must have a net worth of almost $ 2 million, $ 1.9 million to be exact. According to Schwab’s Modern Wealth Survey 2021, this is less than the $ 2.6 million thresholds for Americans to be considered wealthy in 2020.
People’s expectations of wealth also change from generation to generation. Young Americans say they believe that a lower net worth can be considered rich.
Here’s the net worth each generation says you need to be considered wealthy in 2021:
- Millennials (ages 24 to 39): $1.4 million
- Gen X (ages 44 to 55): $1.9 million
- Baby boomers (ages 56 to 74): $2.5 million
Schwab believes that the expected decline in net assets may be due to the Covid-19 pandemic. More than 53% of the 1,000 respondents in the Schwab survey said they have been affected by the pandemic to some degree. About one in five said they were fired or took leave, while about 26% said their pay was cut or working hours were reduced.
A decrease in income will affect net asset value, which is actually a calculation of all of a person’s assets (including cash in checking and savings accounts, financial investments, and the value of any property or vehicle he owns) minus all of your debts (including credit card balances, student loans, and mortgages.
Still, even before the pandemic hit jobs, most Americans were worth less than $ 1.9 million. According to the 2019 Federal Reserve Consumer Finance Survey, prior to the pandemic, the median net worth of American households was $ 748,800.
Also keep in mind that to be in the top 1% of households, your family’s net worth must exceed $ 11 million. Not everyone’s financial situation has been negatively affected by the global health and economic crisis. Due to stimulus payments and reduced spending, some Americans actually increased their savings levels during the pandemic.
Charles Schwab (Charles Schwab), vice president of financial planning, Rob Williams (Rob Williams), said that no matter how your own net worth has changed in the last year, it is worth taking the time to assess where you are now. Position and start planning for the future.
Williams said, “At Schwab, we talk about the importance of planning when there are big changes or transitions in life, like getting married, changing careers, or losing a loved one.” “During a pandemic, we have all collectively experienced a major life event, so it is especially important to take the time to make a plan to make sure your finances are on track and prepare for the future of your next life.”
The Schwab survey found that written financial plans generally have more savings and financial stability as well as less credit card debt and late payments. Williams said, “Last year we spent a lot of time focusing on living today, but now we see an opportunity to look to the future and plan for tomorrow. “