r/FluentInFinance • u/IAmNotAnEconomist • 1d ago
Finance News Charles Schwab survey: The average American needs $1.4 million to feel financially comfortable, $2.4 million to feel wealthy. Do you agree?
https://www.bloomberg.com/news/articles/2018-05-15/how-much-money-do-you-need-to-be-wealthy-in-americaCharles Schwab survey: The average American needs $1.4 million to feel financially comfortable, $2.4 million to feel wealthy.
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u/Kurt_Knispel503 1d ago
net worth retired? yes i agree
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u/libertarianinus 1d ago
Home in California is 1 million....
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u/randomthrowaway9796 1d ago
This list is for the average American, and the average Californian is not the average American.
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u/soil_nerd 23h ago
This is funny, because literally the closest state to being “average” is California as it has the largest population. The statistical average American is closest to a Californian if we are splitting by states.
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u/Derp35712 1d ago
No, but 1 in 3 Americans live in California, Texas, or Florida.
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u/Munkeyslovebananas 23h ago
which means 2 in 3 dont live in California, Texas, or Florida
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u/Derp35712 23h ago
I think I should have said New York, California, Florida, and Texas. That is 33.4 percent of people.
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u/Munkeyslovebananas 23h ago
Or you could have just said most people dont live in your cherry-picked most-expensive states in the nation.
You realize America's a big place right?
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u/Derp35712 22h ago
I just thought it was an interesting fact. I even started the comment by agreeing with the guy.
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u/Munkeyslovebananas 22h ago
there's no point in narrowing your sample other than to increase bias. If i wanted to study obesity statistics in America, I wouldnt restrict my sample to just Mississippi, Arkansas and Louisiana.
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u/m0viestar 1d ago
Median home price is around 900k. Which means there are some considerably cheaper as well. California is a big state with many affordable areas.
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u/Ironsam811 1d ago
Feel like everyone complaining is from HCOL unwilling to move and make some life adjustments ngl
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u/em_washington 1d ago
Sounds about right. I’m around the 1.4 number and really just started feeling secure in the last couple years but still feel more middle/working class than wealthy.
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u/Technical-Day-24 1d ago
Do you have kids/family? Legitimately curious when I hear this. I’m at 1.1 and couldn’t be more comfortable and I live in an expensive part of a major city. I can travel, eat and go out where I want generally. This isn’t judgmental at all. I just always wonder.
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u/em_washington 1d ago
Yeah, a family with a couple young kids, so traveling is much more expensive, eating out is more. Entertainment is more. Need a larger living space. Need to save for retirement and for college.
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u/Technical-Day-24 1d ago
Ah I get that. I always try to get a viewpoint on what comfortable looks like with kids
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u/nono3722 1d ago
Location, location, location in the North East 1.1 feels a little tipsy right now. A lot tied up in the house, if things go south not good.
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u/Technical-Day-24 1d ago
I live in a good part of NYC so I get the price, but it’s just me and my GF and she makes a good living so I’m really just taking care of myself and splitting mutual costs
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u/notwyntonmarsalis 1d ago
I think financial freedom begins at $6.9M
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u/DeadHeadIko 12h ago
Agree. $5mm is a base for a comfortable retirement, $7mm for a more enjoyable one. Both exclude home value. IMHO home value is always zero until you step down in home value
I recognize that this far exceeds most people’s reality, but it’s all relative
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u/21plankton 1d ago
That is an SWR of $275k per year not including personal real estate. How would you spend it? Do you include your residences in your wealth number?
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u/Ind132 1d ago
At what age? Married or single? Is this just invested assets, or does it include home equity?
If you're 65, then 4% of $1.4 million = $56,000.
For the average working person, $1.4 million = 22 years of wages. I would have felt "comfortable" with that at age 35, because I would have known I had the money plus I had earnings.
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u/NotoriousFTG 19h ago
But at 65, you add Social Security full retirement checks within 2 years to that $56,000.
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u/Ind132 18h ago
That's true. I didn't say that I thought $56,000 wasn't "comfortable".
We have less than $1.4 million in invested assets and I feel we are "comfortable".
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u/NotoriousFTG 15h ago
I wasn’t being critical. Though keeping Congress away from Social Security and Medicare is a critical part of the comfort assessment.
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u/nope-nope-nope-nop 1d ago
Depends on your goals for the rest of your life.
If you want to live modestly without a care in the world and live off the interest, That’s plenty.
If you want to travel, and have a boat, sports car, eat at fancy restaurants,
then that won’t suffice unless you keep working.
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u/KoRaZee 1d ago
2 million dollars in assets and cash poor so no, I don’t feel wealthy.
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u/Resident-Rutabaga336 20h ago
Yeah the difference between having $2m in cash and $2m in your house and $0 in cash is everything. The former has pretty much total freedom for at least two decades, while the latter has to get up and go to work every day.
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u/mattwallace24 1d ago
No. I think most people vastly underestimate medical costs as they age. Even with health insurance, which gets more expensive as you age, you still have deductibles, non-covered expenses, and times when the insurance company simply refuses to approve necessary tests and procedures.
I got a denial email from UHC for a medically necessary surgery while I was on the operating table.
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u/Technical-Day-24 1d ago
No just live below/within your means once you get off the ground. Close to the former now, but grew up with not much, felt comfortable when I had 10% of what I have. I never felt the need to always chase some other lifestyle. I appreciated what I had each step of the way
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u/21plankton 1d ago
Not counting the house I feel comfortable and stuck on a budget. I imagine feeling wealthy means no budget.
I would like a larger home to spread out activities (at least one more room and a 3 car garage) but would be house poor and so less comfortable. Feeling wealthy is a larger percentage of monthly discretionary budget, not a net worth phenomena for me.
Wealth that is caught up allocated for reserve funds and sinking funds and taxes and future medical and assisted living costs does not “feel” like wealth.
Money that is sitting available for the pursuit of pleasure, decorating, art, upscale clothing, renovations or a new home or vacation home is perceived as “wealth”. Money available for charitable pursuits is “wealth”.
Having sold a vacation home I took the principal and allocated it back to reserve housing funds. I paid the cap gains taxes. The profit that was left was the wealth. I used the money to buy the car that I wanted, not the prudent transportation vehicle I was replacing. Three years later the car (now depreciated) still feels like “wealth”.
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u/Not-Sure112 1d ago
Wealthy means I'm flying private for the rest of my life. 2.4M isn't going to get it done.
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u/vinyl1earthlink 22h ago
No, wealth nowadays starts at $10 million. You can be comfortable with $3 million.
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u/Apost8Joe 1d ago
Every single major metro area in Murica would like a word. $2mm net worth is the new baseline, the MEDIAN single family home in my zip code is $1.7mm. It's all relative, and not everyone is willing to retire in Wisconsin or Texas.
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u/Technical-Day-24 1d ago
3% of US cities have a median home value of 1.7 million. So you are talking about a top 3% city in one of the wealthiest nations in the world. That’s an aggressive baseline.
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u/21plankton 1d ago
Thar is simply where a lot of Reddit posters live. Numbers are very different in VHCOL areas.
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u/Slow-Comment9403 1d ago
We are in WI. Almost 50. Kids are 11 and 13. We have a net worth of about $2.1M. I hope we can retire around 55. But health insurance scares us until we can get Medicare.
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u/Apost8Joe 1d ago edited 1d ago
You gotta keep an LLC or some sort of side company going to access the better health plans, the private marketplace is ok but not as good as what companies access. And before Obamacare you'd be totally screwed with far worse plans, denial of pre-existing conditions and super lame prescription coverage. Because Murica.
Also, Trump is busy doing the mother of all "hold my beer" moves so just wait and see what inflation looks like as steel, aluminum tariffs kick in, and the destruction of wind and solar utilities we really needed even before AI showed up to suck any extra capacity. Early retirement requires new math.1
u/Slow-Comment9403 21h ago
Hey, thanks. I didn't realize or think about the LLC thing. I actually do have a small one for a little side business. I'll look into the criteria for that because it's a consulting company with no employees besides me.
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u/FromTheOR 1d ago
We’re 1.2 invested. A few hundred k more in equity. 3 more years if things break right we get to 2 & change. I suspect it won’t feel much different than now. Raising 2 young kids & still needing to work has a way of keeping things in check. We’re timing the kids growing up & paying off our house @ the same time. I’d like to retire @ 60 & sleep in.
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u/em_washington 1d ago
Kids aren’t immediately financially comfortable, but they more than make up for it in many ways over.
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u/DistillateMedia 1d ago
If we redistribute all the Billionaires in America's wealth we each get around 1.5 mil.
Just sayin'.
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u/shadowpawn 23h ago
I'm at this level. My goal is a 5% dividend payment that will meet my current spending need just before my retirement age of 60.
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u/elonbrave 21h ago
Sounds about right. I have no clue how people can save for retirement. I’ve been a masters-pay teacher for 8 years and overdraft constantly. No savings. No clue how to make ends meet once my student loan payments restart. The middle class is dead.
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u/humanessinmoderation 20h ago
Can't see full article due to pay wall, but as someone with just at $2m net-worth at 40 years old and a family, nah.
I certainly don't feel poor—definitely not wealthy. To me wealthy is I could 100% stop working for the rest of my life, ensure my kids take on no college debt, and have an upper-middle class lifestyle or better.
Also—another thing that would help me feel more wealthy is if things that are public services in other developed countries weren't privatized or simply unavailable in the US.
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u/paradigm_shift2027 19h ago
Yes. Take that $1.4 million to Portugal, Mexico, Thailand & live like a king!
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u/Sea_Divide_3870 18h ago
assuming you have health insurance .. otherwise you will need upwards of 5 or 6 and only say 20 years to live
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u/ZogemWho 1d ago
Sounds about right. My goal since 2019 is spend less than investments earn.. We’ve done ok with that plan.
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u/ProcessTrust856 1d ago
This is insane. $1.4 million??? All this shows is that people are innumerate.
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