Five Surprising Facts About American Wealth

But inflation also reached a 40-year high in 2022, and in 2023, interest rates have risen to their highest level in 22 years. As a result, everyone's wallet has become a bit lighter.

Many Americans still aspire to that first million. However, due to inflation, an item that cost $1 million in 2019 would now be worth $1.2 million.

In a recent survey of 2,000 Americans conducted by the personal finance website LendingTree, 59% said they didn't believe they would ever become rich. So, here are five figures that illustrate what it means to be wealthy in modern America.

$2.6 million This whopping amount represents the income of an average American family belonging to the top 10% range of affluent Americans. Most of us would consider such a family to be wealthy. This figure is taken from a federal consumer finance survey published on October 18.

"In general, we can consider the top 10% of households to be wealthy," said Christian de Ritis, deputy chief economist at Moody’s Analytics.

Household prosperity grew at record rates from 2019 to 2022. The government implemented an unprecedented series of stimulus checks, quarantine kept Americans at home and encouraged savings, and stock and housing prices increased. However, inflation and rising interest rates have slowed down this process.

"The market fell last year and still hasn't recovered from the peaks of late 2021, and that's it," said Robert Brokamp, a senior retirement consultant at The Motley Fool and a certified financial planning specialist.

$483,000 This is the amount Americans believe they need to earn in a year to become wealthy, according to an online survey of 2,521 adults conducted by YouGov for Bankrate in June 2023. It may sound intimidating, but according to U.S. Census Bureau data, this figure is more than six times higher than the average salary earned by full-time workers in 2021 ($75,203).

In the Bankrate survey, 72% of Americans said they felt financially insecure due to ongoing inflation and rising interest rates. However, financial experts warn that income doesn't always equate to wealth.

"You can earn half a million dollars, but how many assets do you have? How much debt do you have?" said Elizabeth Ayoola, a financial consultant at NerdWallet.

$2.2 million According to the Charles Schwab Modern Wealth Survey, this is the amount of net worth an American should have to be considered wealthy in 2023.

In March, more than 1,000 adults were surveyed online, asking how much money a person in their area would need to be considered wealthy.

This is an annual survey, and it can be expected that this figure will increase slightly each year in line with inflation. But you'd be mistaken. As recently as 2020, respondents believed that Americans needed $2.6 million to be considered wealthy.

"Surveys like this are interesting because they take into account opinions and emotions," said Rob Williams, managing director of financial planning, retirement income, and wealth at Schwab.

$560,000 This amount represents the average net worth of Americans who will truly feel wealthy in 2023, according to the same Schwab survey. According to Schwab, nearly half of Americans feel wealthy, and the average wealth of their households is far from the $2.2 million they aspire to.

"In simpler terms, you can feel wealthy and have less money," said Williams.

When Americans are asked to describe wealth in their own words, they talk about money and assets. But they also mention non-material aspects like well-being, health, and the freedom to spend time with loved ones.

"That's encouraging," said Williams.

$1 million The term "millionaire" may have lost some of its luster, but it remains a benchmark of American wealth.

"There's no doubt that $1 million is a magical number," said Matt Schulz, chief credit analyst at LendingTree. "It doesn't mean that life is easy or that you're Jeff Bezos or Bill Gates, but it does mean that you possess a level of wealth that most people can only dream of."

Vanguard, an investment management company, defines $1 million in investments as high net worth.

According to a new study, the average American family currently reports a net worth of nearly $1.1 million. This may sound like a substantial amount. However, super-rich families distort the average. According to the study, the average American middle-class family has a net worth of $193,000.

Financial consultants often say that wealth is not so much about the number as it is about the feeling. For many Americans, it's a sense of security.

The Consumer Financial Protection Bureau offers a handy financial well-being calculator. It asks questions like whether you can handle unexpected expenses, whether a wedding or birthday gift could derail your finances, and whether you have money left at the end of the month.

Brokamp from the Motley Fool sums it up more succinctly: "Can you pay your bills? Can you reach your goals? Can you withstand a financial shock? If you can answer 'yes' to these questions, you're in good shape."

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