In America, the idea of being “rich” is often a topic of conversation and everyone seems to have an opinion. But how close are Americans’ perceptions of wealth to reality?
The answer depends on where you live and how you define financial independence. Let’s unpack what people think “rich” means versus what the numbers actually show – and see if they line up.
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What People Think is Rich
According to Charles Schwab’s 2024 Modern Wealth Survey, most Americans believe that having $2.5 million makes you wealthy. This figure varies depending on where you live:
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San Francisco: $4.4 million
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New York: $2.9 million
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Washington, D.C.: $2.8 million
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Boston: $2.7 million
For the average American, hitting the $2.5 million mark seems like a solid target. But is that enough to be considered wealthy by all standards?
What the Numbers Say
When you look at official statistics, the idea of wealth gets a little more complicated. To be part of the top 1% of U.S. households, you’d need a net worth of at least $13.6 million. This includes everything you own – houses, investments, savings – minus your debts.
According to Federal Reserve data, even if you aim for the top 5%, you’d still need at least $3.8 million. For those in the top 10%, a net worth of $1.94 million would get you there. Based on these numbers, the public’s perception of $2.5 million isn’t too far off – it lands between the top 5% and 10%.
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Is $2 Million Really Wealthy?
A Reddit post from the “Henry Finance” subreddit brings up a common perspective on the $2 million mark. One user said, “Sure, $2 million is considered ‘rich’ because it is statistically in the country’s top few percent of household assets. But it’s very marginally financially independent. If you aren’t working, that’s just $60k a year in income at a 3% withdrawal rate. Nobody thinks of $60k a year as rich in any HCOL (high cost of living) area.”
The Redditor points out that while $2 million may sound like a lot, it doesn’t always offer the financial freedom people associate with being “rich,” especially in expensive cities.