Is $1 Million Financially Comfortable?


The latest iteration of Charles Schwab’s Modern Wealth Survey exposes the contrast between what Americans have saved for retirement and what they think they need to be financially comfortable. The Visual Capitalist created an amazing graphic based on the Schwab data, which inspired this blog post.

How Much Is Financially Comfortable?

In the 2022 Modern Wealth Survey, on average, people think $774,000 is what’s needed to be financially comfortable. Unfortunately, this number stands in stark contrast to what the average American has saved.

According to the Federal Reserve, the median net worth for Americans was $122,000 in 2019. It’s important to point out that this number spans all adults, so it may not be reflective of someone who is closer to retirement. Nonetheless, there’s a big difference between what people have and what they feel they need to be comfortable.

It’s interesting to note that this amount has fluctuated over the years. In Schwab’s 2018 Modern Wealth Survey, the respondents said they needed $1.4 million to be financially comfortable. In 2019, that number dropped to $1.1 million.

Right before the pandemic, that number dropped further to $934,000. In the 2021 post-pandemic survey, the amount the respondents believed they needed to be financially comfortable cratered to just $624,000.

I find it interesting that, over the five years of the survey, the amount people think they need to have to be financially comfortable has almost halved. Even before the pandemic, survey participants were trending toward believing they needed less money. This doesn’t seem to correlate with consumer spending in the years before the pandemic.

How Much Does It Take to Be Wealthy?

Where the amount it takes to be financially comfortable has fluctuated in Schwab’s Modern Wealth Survey, the amount it takes to be “wealthy” has remained relatively stable. In 2022, it takes $2.2 million to be wealthy, according to survey participants. This number was up from the post-pandemic low of $1.9 million.

Pre-pandemic, the “wealthy” number came in at $2.4 million in 2018, $2.3 million in 2019, and $2.6 million in early 2020.

Just as a point of reference, you’ll need $4.4 million to be in the top 1% of Americans by net worth.

To me, it’s fascinating that the survey participants lowered their numbers in each category after the pandemic rather than increasing them. During times of duress, would you not expect to need more? I’d be curious to know if Schwab has kept the demographic makeup of their survey respondents consistent over the years.

In truth, these numbers represent the psychology of the survey respondents; they are not meaningful benchmarks. The terms “comfortable” and “wealthy” are completely subjective. The true way to understand how much you need to be comfortable is to create a financial plan and update it annually. If you do the math, you may find your comfort level goes up, even if your account values stay the same.

If you need help creating a plan to make yourself financially comfortable, then click here to set up a quick, complimentary introduction call to see if Prana Wealth is a good fit. We do still have the capacity to take on new clients.

As a fee-only financial advisor in Atlanta, we can (and do) work virtually with clients all across the U.S. and we’re here to help you when you’re ready.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but is intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax, or financial advice. Please consult a legal, tax, or financial professional for information specific to your individual situation.
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