Americans think they need $2.5 million to be wealthy

The price tag on “wealth” keeps going up.

On average, Americans now believe they need $2.5 million to be considered wealthy, according to a Charles Schwab survey released Wednesday. That’s up from $2.2 million two years ago.

That figure looks different by generation, however, with younger Americans having a lower threshold for what they would consider to be wealthy. For Gen Z, those born between 1997 and 2002, it would take $1.2 million to be wealthy — the least of all age groups. On the other hand, Baby Boomers, born from 1948 to 1964, said they would need $2.8 million.

“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 Schwab, said in a statement.

The bar for financial comfort is significantly lower across the board. Generally, financial comfort means having enough to maintain a good standard of living without worrying about money.

Americans need an average net worth of $778,000 to feel “financially comfortable,” down from a peak of $1 million last year, Schwab found. In 2021, that figure was as low as $624,000. Much like with wealth, the cost of financial comfort grows as Americans get older.

The survey also clocked optimism, particularly for the younger generations, about their ability to build wealth. When asked if they think they will be wealthy within their lifetimes, 21% said they are on track to be wealthy, according to Schwab. Millennials and Gen Z were the most optimistic about being wealthy in their lifetimes, with 29% saying they are on track.

The retirement problem

The so-called “magic number” — how much U.S. adults believe that they’ll need for retirement — hit $1.46 million this year, Northwestern Mutual found. That number has grown more than 53% from $951,000 in 2020.

That figure also represents a 15% jump from the $1.27 million Americans reported in 2023, representing a major stretch beyond the rate of inflation in the U.S., which is currently hovering around 3% on an annual basis.

Younger Americans in particular are expecting the costliest retirement, with Gen Z and millennials projecting that they’ll need more than $1.6 million to live comfortably once they’re in their sunset years.

These sky-high figures still aren’t reflected in people’s savings. Last year, the median account balance for Vanguard participants was $35,286, up 29% from a 2022 drop-off, according to Vanguard Group’s annual How America Saves report.

According to Northwestern Mutual, the average amount that U.S. adults have saved for retirement fell from $89,300 in 2023 to $88,400, and remains more than $10,000 below the $98,800 five-year peak seen in 2021.