Most Americans say that to be considered "wealthy" in the U.S. in 2021, you need to have a net worth of nearly $2 million — $1.9 million to be exact.
That's less than the net worth of $2.6 million Americans cited as the threshold to be considered wealthy in 2020, according to Schwab's 2021 Modern Wealth Survey.
Wealth expectations also varied by generation, with younger Americans saying they felt that lower net worths could be considered wealthy.
Here's the net worth each generation says you need to be considered wealthy in 2021:
- Millennials (ages 24 to 39): $1.4 million
- Gen X (ages 40 to 55): $1.9 million
- Baby boomers (ages 56 to 74): $2.5 million
The drop in the net worth expectations could be due to the Covid-19 pandemic, according to Schwab. Over half of Schwab's 1,000 survey respondents, 53%, reported that they were financially impacted in some way by the pandemic. About 1 in 5 say they were laid off or furloughed, while about 26% report their salary was cut or their hours were reduced.
A drop in income can impact net worth, which is essentially a calculation of all of a person's assets — including cash in checking and savings accounts, financial investments and the value of any real estate or vehicles owned — minus all their debt, including credit card balances, student loans and mortgages.
Still, even before the pandemic affected employment, most Americans had nowhere near a net worth of $1.9 million. Prior to the pandemic, U.S. households had an average net worth of $748,800, according to The Federal Reserve's 2019 Survey of Consumer Finances. The median, or midpoint, net worth of all U.S. households was much lower, just $121,700 in 2019.
It's also worth noting that to be considered part of the top 1%, households need a net worth of over $11 million.
Not everyone's finances were negatively impacted by the global health and economic crisis. Thanks to stimulus payments and reduced spending, some Americans actually increased their savings levels during the pandemic.
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Regardless of how your own net worth changed over the past year, it's likely worth taking the time to evaluate where you're at right now and starting to plan for the future, says Rob Williams, vice president of financial planning at Charles Schwab.
"At Schwab, we talk about the importance of having a plan at times of significant change or transition in life, like getting married, changing careers or losing a loved one," Williams says. "With the pandemic, we have all collectively experienced a major life event, so it's particularly important to take the time to create a plan to help ensure your finances are on track and be ready for whatever comes next in your life."
Those who create a written financial plan typically have more savings and financial stability, as well as less credit card debt and late loan payments, Scwab's survey found.
"We have spent so much of the last year focusing on getting through today, but we're now seeing an opportunity to look ahead and plan for tomorrow," Williams says.
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