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.
“Americans now think it takes an average of $2.5 million to be considered wealthy—which is up slightly from 2023 and 2022 ($2.2 million),” reads an Aug. 21 statement by the company.
“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.
The survey’s $2.5 million wealth threshold is nearly 14 percent higher than the 2022 level.
During this period, the cost of living rose by more than 11 percent, according to data from the St. Louis Fed.
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.
“Our survey reinforces that people with a written financial plan are more confident about achieving their personal financial goals. Financial planning helps people understand where they are today and create a roadmap to get where they want to be.”
