Net worth to be rich and comfortable: pre-pandemic vs. June 2020

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• Americans perceive wealth and financial stability differently than before the COVID-19 pandemic.
• According to Charles Schwab’s annual Modern Wealth Report, Americans said in June that it takes an average net worth of $ 655,000 to be financially comfortable and $ 2 million to be wealthy.
• As people reduced their expenses during the pandemic, what it takes to get comfortable has become clear, and the wealth threshold is probably relative.
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The coronavirus outbreak has completely shaken the way Americans think about their finances.

In mid-January, Charles Schwab surveyed 1,000 Americans between the ages of 21 and 75 about their financial health and their money prospects for their annual Modern Wealth report.

Respondents said that it takes an average net worth of $ 934,000 to be financially comfortable and an average net worth of $ 2.6 million to be wealthy.

Then the pandemic struck.

By the July 4 holiday, more than 17 million Americans were out of work and collecting unemployment benefits and countless families were struggling to earn a living. The United States government sent $ 1,200 stimulus checks to households and loaned more than $ 520 billion to small businesses to keep the economy afloat during the spring and early summer.

When Schwab surveyed Americans again between June 25 and July 2, he found that they had dramatically lowered their financial success markers, saying it takes a net worth of $ 655,000 to get comfortable and a net worth of $ 2 million. to be rich, on average.

Interestingly, the Gen Xers who participated in the survey reported the highest adjustment to ideal comfort and wealth levels between January and June.

“The pandemic and the uncertainty it is causing are changing the way people think about their wealth and planning for the future, but we are seeing a very productive investor reaction in many ways,” said Jonathan Craig, executive vice president. senior at Schwab Investor Services. .

“In both the results of our survey and the customer behavior that we have observed since March, we see that a high percentage of people are committed to their money and investments, and in many cases we are looking for more help and guidance to make sure they are on the way. correct, “Craig said.

Net worth figures may look different if adjusted for race, city, or job

It is not that people’s basic spending levels have dropped during the pandemic: we all continue to pay for food and housing and make debt payments as best we can. But since much of the United States followed orders to stay home to curb the spread of the coronavirus from the start, we’ve spent considerably less money on discretionary items like dining out and traveling.

The crisis has made it clear what it takes to feel comfortable, and the perception of wealth is relative. Still, these numbers would likely look different when adjusted for race, city, and occupation, as the impact of the coronavirus and related job losses has negatively affected black and Hispanic people and younger workers.

Fifty-seven percent of Schwab respondents said that they or a close relative have been financially affected by COVID-19. At the same time, 40% said they are more likely to save more now than before the pandemic; 24% said they are more likely to have a financial plan; and around 20% said they are more likely to invest more or start investing during the crisis.

This underscores Federal Reserve data showing that personal savings account balances increased dramatically during the spring months, and Columbia University research found that emergency government aid helped support about 12 million people. people out of poverty. But as increased unemployment benefits expire and Congress struggles to agree on more emergency aid, Americans’ perception of financial health and wealth may change again.