When it comes to achieving financial peace of mind, you might not need to be a millionaire. In fact, Americans say you only need one net worth of $ 624,000 to be considered “financially comfortable”.
This is a significant drop from the net worth of $ 934,000 that Americans cited as the minimum needed for financial comfort last year, according to Schwab Modern Wealth Survey 2021, an annual survey of 1,000 American adults that focuses on how Americans view saving, spending, investing, and wealth.
The Covid-19 pandemic almost certainly played a role in lowering the bar for net worth, which is essentially a calculation of all of a person’s assets – including cash in checking accounts and savings, financial investments and the value of any real estate. or owned vehicles – minus all their debts, including credit card balances, student loans and mortgages.
The global health and economic crisis has caused many Americans to re-prioritize what matters, Schwab found. About 69% of survey respondents say mental health is more important to them today than ever before.
The definition of financial comfort also varies by age and gender. Men estimate that it takes a net worth of $ 864,000 to be considered “financially comfortable,” more than double the net worth of $ 325,000 cited by women.
Here is each generation’s net worth that indicates you should be considered financially secure in 2021:
- Millennials (24 to 39 years old): $ 618,000
- Gen X (40 to 55 years old): $ 717,000
- Baby boomers (56 to 74 years old): $ 609,000
Interestingly, some Americans may have already reached this revised definition of financial comfort. U.S. households had an average net worth of $ 748,800 before the pandemic, According to the 2019 Federal Reserve Consumer Finances Survey. However, the median or median net worth of all families was much lower, just $ 121,700 in 2019.
Among the many lessons we have learned from the pandemic is that it is important to be financially prepared and to be mindful of your financial health, says Rob Williams, vice president of financial planning at Charles Schwab.
With that in mind, it’s probably worth taking the time to assess where you are now and write a written financial plan to make sure your finances are on track for the future. Perhaps by doing this, more Americans will accumulate enough money to reach the net worth of $ 1.9 million considered “rich.”
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