View pictures in App save up to 80% data.
What does it mean to be wealthy? Turns out, opinions vary wildly depending on who you ask – and where they live.
The recent Modern Wealth Survey conducted by Charles Schwab reveals that Americans consider a net worth of $2.5 million as the threshold for being classified as "wealthy." While this figure may seem extravagant to some, residents in expensive urban areas like San Francisco view it differently. Many in the Bay Area argue that a net worth of around $4.4 million is necessary for a sense of financial security. Additionally, opinions on the matter have also been shared by users on Reddit, contributing to the ongoing discussion.
A Reddit user referred to the $2.5 million threshold as "astonishingly low," asserting that "$10 million is the actual baseline." Another user contributed some calculations to support this claim, referencing the well-known 25x rule: you take your yearly living expenses and multiply it by 25 to find the amount of invested capital required to sustain a comfortable lifestyle through interest. For instance, if your desired lifestyle costs $70,000 annually, you would need $1.75 million in investments. Prefer luxury yachts and private jets? If your expenses hit $15 million a year, that translates to a hefty $375 million investment portfolio. Simple, right?
Then, there's the philosophical side of the debate. One Redditor said they knew they were "wealthy" when money couldn't solve their problems. For them, hitting $3 million was the sweet spot where they could afford the life they wanted and any extra cash became irrelevant to their happiness. Another pointed out that most Americans aren't even close to these numbers – many can't cover a $1,000 emergency without borrowing. From that lens, $2.5 million might as well be a billion.
Beneath the playful exchanges on Reddit, the discussion highlights the relativity of wealth, which is influenced by tangible figures, individual values, and specific situations. Historically, the phrase "modest competence," popularized in Jane Austen's writings, referred to a degree of wealth that ensured comfort and security without indulgence. When adjusted for inflation, this idea could equate to a yearly income of around $100,000 to $150,000 in today's terms. Following the 25x rule, one would require an investment of $2.5 to $3.75 million, aligning closely with findings from Schwab's survey.
A couple with $2.5 million might feel rich in rural Kansas but stretched thin in Manhattan, where housing alone can eat up half a fortune. And then there's the generational divide – Boomers think $2.8 million is the magic number, but many Millennials, facing student debt and rising living costs, might find even that unrelatable.
In the end, whether wealth is defined by having millions saved or merely the capacity to live without financial worry, the main point is clear: financial security varies for everyone and is not a universal concept.
Before you start measuring yourself against a survey or a Reddit thread, consider what wealth truly means. And if you're unsure how to get there, it might be worth chatting with a financial advisor who can help you map out a plan that works for your goals – whether that's yachts or just peace of mind.
Would you like to receive the most recent stock analysis from Benzinga?
This article How Can You Determine If You're Considered Wealthy? The Key Figure Is $2.5 Million, Yet It's More Complex Than That. originally appeared on Benzinga.com
