Americans Now Need $2.5 Million to Be Considered Wealthy: Charles Schwab Survey

The amount of money required to be seen as rich has risen over the past years amid inflation, with younger people having a lower wealth benchmark, according to a recent survey by financial services company Charles Schwab.
“By generation, Boomers have the highest threshold of what it takes to be considered wealthy, at $2.8 million, while the younger generations, Millennials and Gen Z, have lower thresholds of what is considered wealthy” at only $1.2 million, it adds.
California had the highest wealth expectations, with respondents from San Francisco saying it takes $4.4 million to be considered rich. Southern California was at the second spot with $3.4 million. Dallas, Phoenix, and Houston had the lowest thresholds at $2.2 million to $2.3 million.
The jump in the level of what is considered wealthy has happened amid a period of surging inflation, which has raised the overall cost of living. As living expenses rise, so does people’s estimate of how much money is required to live a wealthy life.
Despite facing the challenge of high inflation, more than one in five Americans said they were “on track to be wealthy,” with optimism highest among Generation Z and lowest among baby boomers, according to the statement.
Moreover, nearly a third of respondents said they were on track to be in control of their finances, with millennials and Gen Z more optimistic in this regard.
“Wealth means different things to different people, whether it’s financial freedom, enriching experiences with friends and family, or a certain dollar amount,” Rob Williams, managing director of financial planning at Charles Schwab, said in the statement.
The report points out that “inflation continued to be the top financial concern, despite the inflation rate falling over the prior year.”
Less than half of Americans in retirement believed they had saved enough, with a significant share convinced they did not accumulate necessary savings. Almost 90 percent expressed worries about inflation reducing the value of their assets, according to the survey.
“Whether it’s a trip to the gas station, grocery store, or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” Deb Boyden, head of U.S. defined contribution at Schroders, said in a statement.
For instance, investments with a fixed return, such as certain bonds or certificates of deposits, usually are a bad choice. The fixed interest amount received annually would be worth less and less with each passing year as inflation erodes the value of cash.
When it comes to stocks, the effect can be mixed, depending on the nature of the business.
Investments in commodities such as oil, precious metals, or agricultural goods do well during periods of high inflation, according to Western & Southern Financial Group.