The American dream of financial prosperity has become increasingly elusive in recent years, as rising costs of living have pushed the benchmark for wealth to new heights. According to a new survey by Charles Schwab, Americans now believe it takes an average net worth of $2.5 million to be considered rich, a significant increase from the $2.2 million estimated last year.
This surge in the perceived wealth threshold reflects the growing disparity between the aspirations of Americans and the reality of their financial situations. While the median net worth of U.S. households stood at $193,000 in 2022, the survey’s findings highlight the disconnect between the average American’s financial goals and their current circumstances.
Rob Williams, managing director of financial planning at Charles Schwab, attributed the increase in the perceived wealth threshold to a combination of factors, including inflation and personal aspirations. “Wealth can be very personal and aspirational,” Williams noted. “The general trend of inflation has contributed to the upward trajectory of perceived wealth levels.”
While Americans may need significantly more wealth to feel rich, they still have a much lower threshold for financial comfort. The survey found that an average of $778,000 in assets is sufficient for most Americans to live a comfortable life.
Despite the recent cooling of inflation, prices remain significantly higher than pre-pandemic levels. The overall cost of living has increased by approximately 21% since January 2020, according to government data. However, rising wages and a buoyant stock market have helped to offset some of these inflationary pressures, particularly for investors with retirement savings.
As the American dream continues to evolve, it is clear that the pursuit of financial security requires a more ambitious approach than ever before. The increasing gap between perceived wealth and reality underscores the challenges faced by many Americans in achieving their financial aspirations.
