Last time, I asked – Can YOU become a millionaire? Incredibly, 95% of voters picked yes. That’s awesome, I love it! It really isn’t that hard to become a millionaire in the U.S. if you make at least a median household income of $60,000/year. You just have to commit to saving and you’ll get there. The point of the previous post was for you to pick yes. Unfortunately, a million dollars doesn’t go as far as it used to. Most people don’t even consider a million dollars wealthy anymore. So how much money do you need to feel wealthy? Let’s check it out.
*This post was originally written in 2013. I’ve updated and expanded it with the latest info. I hope you enjoy this one.
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Wealth isn’t all about money
Of course, wealth isn’t all about money. Health, relationships, freedom, and happiness are all integral parts of wealth. Money won’t make you feel wealthy if you’re missing some of these. When asked about wealth in Charles Schwab’s 2018 Modern Wealth Index survey, two of the top three answers weren’t related to money.
Those things are more difficult to measure, though because they are all subjective. We all have different definitions of happiness. My happiness doesn’t necessarily match yours. In fact, I think the pursuit of happiness is misguided. We can’t measure those other things, so we’ll just focus on the money today. It’s way easier to figure out net worth than happiness.
When asked to focus on just the money, respondents said it takes $2.4 million to be considered wealthy.
I don’t feel wealthy
Really, $2.4 million? That seems a tad low to me. Our net worth is over that line and I don’t feel rich at all. The problem is the survey is meant to be representative of the US population. That means most of those surveyed are not millionaires. $2.4 million sounds like a lot of money to regular people, but millionaires don’t consider that wealthy.
Being wealthy is actually a moving target. It turns out most people need twice or more of their current net worth to feel wealthy. If someone is worth $5 million, they would say wealthy means $10 million. That’s pretty funny, isn’t it?
The 2x wealth corollary is pretty much spot on for me. When I wrote this in 2013, our net worth was about $1.5 million. I thought we’d feel wealthy when our net worth reaches $3 million. Today, I think $3 million is merely comfortable, not wealthy. As I said, it’s a moving target. However, I’m pretty sure I’ll feel wealthy when we hit $5 million…
UBS wealth study
To back up my $5 million = wealthy theory, here is a wealth study from UBS in 2013. It’s a bit older, but investors agreed that wealth isn’t just about having a certain amount of money. The majority of investors define wealth as having no financial constraints on what they do. But when asked to assign a dollar amount to be wealthy, they sayit takes $5 million.
This study targeted investors so the results skewed a bit higher. Investors surveyed were older than 25 years old and have at least $250,000 in investable assets; half have at least $1 million in investable assets. This group is doing a lot better than the average American household.
$5 million sounds just about right to me. I’m pretty sure we’ll feel wealthy when we reach the $5 million mark. We could conservatively withdraw 3% every year. That is $150,000 per year. It will be enough for us to live a very comfortable lifestyle. That’s way more than what we currently spend, about $50,000 per year. We’ll have plenty of margins with that kind of income.
Mrs. RB40 and I could stop working completely with that kind of money. I plan to keep blogging, though. I enjoy writing and interacting with readers. You need some goals to drive you forward or else life will be pretty boring.
Do you feel wealthy?
Okay, it’s your turn. Tell us how much money you need to feel wealthy? Would it take $3 million, $5 million, $10 million, or more? If it’s not an absolute value, think about what would make you feel wealthy. Maybe doing better than your neighbors?
Sign up withPersonal Capitalto help keep track of your income and net worth. Personal Capital is geared toward investors and has many great tools. See my review of Personal Capital and how they helped mereduce my investment fees.
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retirebyforty
Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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FAQs
It turns out most people need twice or more of their current net worth to feel wealthy. If someone is worth $5 million, they would say wealthy means $10 million.
How much money do I need to feel rich? ›
“With $3 million, that's $120,000 annually, roughly twice the average household income [was] in the U.S. in 2022,” said Disselkamp. “When it comes to income, I'd say an annual passive income of around $250,000 after-tax is where one might start to feel wealthy.
How much money is considered upper class? ›
Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131. Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.
How much money is considered middle class? ›
What does this all mean? By the Census data, it means that if you earn between $50,000 and $150,000 a year, you are considered middle class. It's a pretty straightforward answer, but it isn't particularly helpful if you're trying to climb up out of a lower income bracket into the middle class.
Is $3 m net worth good? ›
The 95th percentile is considered wealthy, with $3.2 million household net worth, so even more spending power, which means estate planning and possibly more than one home. And the 99th percentile is very wealthy, with $16.7 million in net household worth, Schmidt says.
How much cash is considered rich? ›
Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.
Is $100 000 considered rich? ›
Earning more than $100,000 per year would put you well ahead of the median American household, which brings in $74,784 as of 2021. Assuming you're an individual without dependents, that salary would qualify you as upper class, according to three different definitions (Brookings, Urban Institute and Pew Research).
What is poor class income? ›
Lower Class: This typically includes individuals or families living paycheck to paycheck, struggling to cover basic necessities like food, housing, and healthcare. Income here could range from below the poverty line to around $30,000 per year.
What is middle class income in 2024? ›
Key Findings. In a large U.S. city, a middle-class income averages between $52,000 and $155,000. The median household income across all 345 cities is $77,345, making middle-class income limits fall between $51,558 and $154,590.
What jobs are upper class? ›
Generally, anything that requires advanced education and partakes in the knowledge-based economy. This might include professors, doctors, lawyers, engineers, mathematicians, upper-level managers, or stock traders.
Where you rank by income
- Lower class: less than or equal to $30,000.
- Lower-middle class: $30,001 – $58,020.
- Middle class: $58,021 – $94,000.
- Upper-middle class: $94,001 – $153,000.
- Upper class: greater than $153,000.
What Is Considered a Good Salary? Well, what makes a good salary depends on you, your needs, and your values. But for most folks, a good salary is one you can live on comfortably, meaning your basic needs, like food, utilities, housing, transportation and clothes, are taken care of each month without going into debt.
What is a good salary in 2024? ›
Decent Salary
| Annual Salary | Hourly Wage |
|---|
| Top Earners | $86,000 | $41 |
| 75th Percentile | $68,500 | $33 |
| Average | $44,910 | $22 |
| 25th Percentile | $24,500 | $12 |
The wealth of U.S. households by income tier. There is a wide gulf between the wealth of lower- and upper-income U.S. households. In 2021, the typical upper-income household had a median net worth of $803,400. This was 33 times as much as the wealth of the typical lower-income household ($24,500).
What is a respectable net worth? ›
Net worth is the difference between the values of your assets and liabilities. The average American net worth is $1,063,700, as of 2022. Net worth averages increase with age from $183,500 for those 35 and under to $1,794,600 for those 65 to 74. Net worth, however, tends to drop for those 75 and older.
What salary is considered rich for a single person? ›
Americans say they would need to earn $483,000, on average, to feel rich or achieve financial freedom, according to a recent Bankrate survey. That's over eight times the national median income of about $57,200, according to Labor Department data.
At what net worth did you feel rich? ›
Here's The Average Net Worth Of People Who Consider Themselves 'Wealthy' Americans estimate that a net worth of $2.2 million is required to be considered wealthy, according to a 2023 survey conducted by Charles Schwab & Co., Inc.
How rich should I be at 30? ›
Your Net Worth Should Be Between $25K and $100K
“Of course, there are so many factors here. Most people start to earn more money as they get older and can save more. If you are saving $500 per month toward retirement, then your net worth can be around $25,000,” she said.
How much should you have saved by 30 to be rich? ›
By 30, it would be beneficial to have $50,000 saved. This comes from the goal of being able to replace about 70% to 80% of your pre-retirement income in retirement.” While having the equivalent of your annual salary saved up by 30 may seem unattainable, Kovar believes it's achievable if you start saving in your 20s.
How many people make over $500K? ›
Still $500K is a ridiculously high amount. And this is not even household income, which implies 2 earners — this is a single person's pre-tax salary. Less than 1% of people make that much or more.
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