Summary Findings – Net Worth Comparison USA

[Car-Guy]

To a guy with 5 grand NW a guy with half a mill is wealthy.

When you have 5 mill it takes half a billion.

I know at least one guy with 5m that thinks it just takes 25m to be wealthy... But I get your point

 

[ut2sua]

Top 2%->10% numbers look shockingly low.
Something is going on here....

 

[MichaelB]

At the lower level of the numbers you mention, doesn't current income and it's probability of continuing play a significant role? For example, one athlete retires with 2 million bux and little income potential to live on the rest of his life. Another, after his rookie year, has 2 million bux and also a guaranteed contract paying 25 million annually for the next 3 years. Big difference.

Just saying, I think that potential future earnings are seldom mentioned in these surveys or discussions but likely often play a big role.

I agree. I also agree with Car Guy the numbers look off. Too low. The concentration of wealth in the top 0.01% - 10% is greater. The table is totally out is sync with the often published report that half the people in the US don’t have $1k in savings for an emergency expense.

 

[Gumby]

I look at these numbers and see the yearly income at a 4% withdrawal rate. Even the top 5% median person with a million bucks is only generating $40k a year. That is far from rich living.

 

[CaliKid]

From my POV, "as a retiree", I consider 2m as cautiously comfortable.. 10+m as reasonably well off, 25+m as borderline wealthy and 50m as FU money. But that's me...

I tend to agree with something along these lines. I might get to FU money at $30m or so but nonetheless agree.

I would add it also depends on where a person is comfortable living (HCL or LCL) and their lifestyle. I know people with $500k that feel RICH and people with $10m that feel they need to be very careful. How one spends money, and the amazing speed with which it can be spent, is truly amazing.

 

[jazz4cash]

Those %’s make me feel rich, but we’re so middle class. I never considered us in that category. How sad for 50% of our population who want to RE. It’d be interesting to know ages that go with the data.

There is another calculator for net worth percentile but age on the site.

https://www.thekickassentrepreneur.com/net-worth-by-age-percentile-calculator-for-usa/

 

[Car-Guy]

This "relative wealth" thread reminds me of a legend in the gambling world. I'm sure many have heard this but, as a gambler, it puts wealth into real world perspective for me... There is always someone a lot richer, so at some point, does it really matter?

"Perhaps the best Kerry Packer story involves him playing poker against a Texas oil tycoon at the Stratosphere casino in Vegas. During a heated argument, the tycoon yelled, “I'm worth 60 million!” Packer replied by pulling a coin out of his pocket and simply asked, “heads or tails?”"

Kerry Packer, an Australian, was a well known high stakes gambler and multi-billionaire. The story goes on that the Texan tycoon backed off and was never seen again.

 

[KarlH]

I look at these numbers and see the yearly income at a 4% withdrawal rate. Even the top 5% median person with a million bucks is only generating $40k a year. That is far from rich living.

I think it all gets down to spending. I think back to when we bought our house, on which basic payments haven't changed much, and my salary back then. Somehow we could afford the house, taxes, clothing, cars, and our household income continued to rise while saving for FIRE.

Despite our household income growth, when I ask myself what could we live on, I go back to something closer to that original salary from years ago. I am frankly surprised at the numbers folks describe as their monthly expenses, with some describing thousands spent on eating out and entertainment each month. That said, many of these people are living in high cost areas and just have different lifestyles than us. We have most of our meals at home, and I still bring a bag lunch to work everyday. While I don't think we could survive on $40K/year, if the house were completely paid off we might be able to.

 

[Sojourner]

Comfortable VS Wealthy.... In Schwab's opinion...

https://www.usatoday.com/story/mone...t-does-take-rich-less-than-before/5521307002/

"They now believe that, on average, it takes $655,000 to be financially comfortable, down from $934,000 in January, according to Charles Schwab’s 2020 Modern Wealth survey. And they think the minimum benchmark to be considered wealthy is $2 million, down from $2.6 million in January. The survey of 1,000 Americans was conducted for Schwab by Logica Research June 25-July 2."

So, according to Schwab, what is the significance of being "financially comfortable" vs. "wealthy"? What is the practical effect of that? Certainly, having $2MM+ would offer significantly more financial comfort/reassurance, but what are they saying it's supposed to indicate other than that?

 

[Sojourner]

Top 2%->10% numbers look shockingly low.
Something is going on here....

Not sure what this means. What do you think the top 2% (or top 10%) net worth threshold should be? What do you think is "going on here"? Sounds like you believe it should take much more NW to get into the upper tiers of wealth. If so, what are you basing that on?

 

[Dtail]

so 500K is the median, what is the mean?

Probably skewed much higher, based on past historical reporting of these types of numbers.

 

[Car-Guy]

So, according to Schwab, what is the significance of being "financially comfortable" vs. "wealthy"? What is the practical effect of that? Certainly, having $2MM+ would offer significantly more financial comfort/reassurance, but what are they saying it's supposed to indicate other than that?

You would need to ask them....It's their opinion/article. Your guess (or assessment/interpretation) is as good as mine.

 

[523HRR]

From my POV, "as a retiree", I consider 2m as cautiously comfortable.. 10+m as reasonably well off, 25+m as borderline wealthy and 50m as FU money. But that's me...

+1

 

[youbet]

I seriously doubt that Charles Schwab does much anything himself. Either the employees or contractors do the work...

It does say "according to Charles Schwab’s 2020 Modern Wealth survey"... Close enough for me!

The point is that Schwab periodically funds a survey designed to measure what levels of wealth Americans deem "comfortable," "wealthy," etc. The results of this survey indicated that there has been a significant drop in wealth level perceived by Americans as required to reach each stage. Schwab, and apparently USA Today who put the article you quoted together, feel that the impact of the COVID-19 economic meltdown is a big factor influencing people and driving the change.

The survey of 1,000 Americans was conducted for Schwab by Logica Research June 25-July 2.

Overall, 57% ofAmericans have been financially impacted by the pandemic, including 68% of millennials, the survey found. Thirty percent – and 41% of millennials – suffered a cut in salary or hours. A quarter said they or a close family member were furloughed or laid off.

A quarter of those surveyed say they’re very confident in reaching their financial goals, down from a third in January.

► 52.5% say they’re financially stressed, up from 45.9% before the crisis.

► 39% say relationships are most important to their overall happiness, followed by health (27%) and money (17%). Pre-crisis, relationships led at 36%, followed by health (30%) and money (16%).

What Schwab's (the survey funder) opinion is means little to me. The knockout fact is how much current economic conditions have impacted the thinking of Americans reguarding wealth plateaus, investing, financial security, etc. These are all things that will impact the future direction of our country.

 

[Car-Guy]

The point is that Schwab periodically funds a survey designed to measure what levels of wealth Americans deem "comfortable," "wealthy," etc. The results of this survey indicated that there has been a significant drop in wealth level perceived by Americans as required to reach each stage. Schwab, and apparently USA Today who put the article you quoted together, feel that the impact of the COVID-19 economic meltdown is a big factor influencing people and driving the change.

That's about what I got out of it too!

 

[skipro33]

Those net worth numbers are not taking into consideration the age of those persons. Break it down by age and look again before you think you feel good about your own personal numbers;
https://www.bankrate.com/personal-finance/average-net-worth-by-age/

 

[Which Roger]

Those net worth numbers are not taking into consideration the age of those persons. Break it down by age and look again before you think you feel good about your own personal numbers;
https://www.bankrate.com/personal-finance/average-net-worth-by-age/

This. Many of us are probably 2-percenters now, but I bet very few of us were in top half before our late 30s or thereabouts.

 

[Mulligan]

I agree. I also agree with Car Guy the numbers look off. Too low. The concentration of wealth in the top 0.01% - 10% is greater. The table is totally out is sync with the often published report that half the people in the US don’t have $1k in savings for an emergency expense.

I agree. I also agree with Car Guy the numbers look off. Too low. The concentration of wealth in the top 0.01% - 10% is greater. The table is totally out is sync with the often published report that half the people in the US don’t have $1k in savings for an emergency expense.

That was exactly what I was thinking Michael. Im mean what is the odds of 60% of people having $500,000 equity in a house and not having enough cash to pay for a $500 bill without slapping it on a credit card.

Nearly six in 10 Americans don't have enough savings to cover a $500 or $1,000 unplanned expense, according to a new report from Bankrate.
Only 41% of adults reported having enough in their savings account to cover a surprise bill of this magnitude. A little more than 20% said they would put it on a credit card, the report said, while 20% would cut their spending and 11% would turn to friends and family for financial assistance.

https://money.cnn.com/2017/01/12/pf/americans-lack-of-savings/index.html

 

[Letj]

I look at these numbers and see the yearly income at a 4% withdrawal rate. Even the top 5% median person with a million bucks is only generating $40k a year. That is far from rich living.

It may not be rich living Gumby but it’s certainly independent living, something the overwhelming majority of the world’s population will never be able to do so $40K counts for a lot in this scenario. I find that I often have to re-ground myself when it comes to feeling like I have enough. I am certainly in the top 2% but in my head I am still poor. It’s always a matter of perspective, your expectations and with whom you compare your financial situation. Clearly, if one decides to retire on $40K, there are places in the US where they can do so comfortably and most certainly in just about everywhere in the world. $40K/year for the rest of your life without having to answer to anyone and living life on your own terms is a big deal no matter how you slice it. With that said, I am retired and live on a lot more.

 

[Dtail]

It may not be rich living Gumby but it’s certainly independent living, something the overwhelming majority of the world’s population will never be able to do so $40K counts for a lot in this scenario. I find that I often have to re-ground myself when it comes to feeling like I have enough. I am certainly in the top 2% but in my head I am still poor. It’s always a matter of perspective, your expectations and with whom you compare your financial situation. Clearly, if one decides to retire on $40K, there are places in the US where they can do so comfortably and most certainly in just about everywhere in the world. $40K/year for the rest of your life without having to answer to anyone and living life on your own terms is a big deal no matter how you slice it. With that said, I am retired and live on a lot more.

Plus if there are 2 decent SS numbers coming in plus the 40k, it can be quite comfortable.
Feel poor at 2m+

 

[ut2sua]

Not sure what this means. What do you think the top 2% (or top 10%) net worth threshold should be? What do you think is "going on here"? Sounds like you believe it should take much more NW to get into the upper tiers of wealth. If so, what are you basing that on?

As someone has pointed out earlier, 1mil NW (top 5%) will generate 40K/year (4% WR) or 30K/year (current thinking of 3% WR), then that is hardly a comfortable place to be financially to FIRE in most places in the US. I do expect the NW to be much higher especially for the top 2% even if the 2.4mil is quoting the lower bound. I am questioning the data source and not the OP.

 

[Dtail]

As someone has pointed out earlier, 1mil NW (top 5%) will generate 40K/year (4% WR) or 30K/year (current thinking of 3% WR), then that is hardly a comfortable place to be financially to FIRE in most places in the US. I do expect the NW to be much higher especially for the top 2% even if the 2.4mil is quoting the lower bound. I am questioning the data source and not the OP.

The net worth doesn't include the income side with pensions and Social Security, so perhaps it is a reasonable number at 2.4m.

 

[rk911]

"Net Worth USA Percentiles – Top 1%, 5%, 10%, and 50% in Net Worth"

I include our home in our net worth.

as do we...what we own minus what we owe (which is nada). we also include the value of our vehicles but i do adjust their value down each year. i do not include value of our pensions.

 

[RobLJ]

This seems a considerable underestimate of household net worth.

The Fed released 2016 data which showed the 90th percentile at almost 1 million (952000), but as I recall from past breakdown of the top 10%, median networth in the top 10% goes up steeply from that point.
Sorry, I can't find the top 10% breakdown tables anymore.


https://www.census.gov/library/publications/2019/demo/p70br-166.html


However, I think this source is using those original tables (a guess) and here goes, for 2016/17:


Net Worth Percentile2016 Dollar Cutoff
90.0%$1,182,390
95.0%$2,377,985.22
99.0%$10,374,030.10
99.5%$16,115,373.00
99.9%$43,090,281.00



https://dqydj.com/net-worth-brackets-wealth-brackets-one-percent/

 

[rk911]

The net worth doesn't include the income side with pensions and Social Security, so perhaps it is a reasonable number at 2.4m.

agree. and it all depends on lifestyle post retirement. we are living quite well on SS and pensions with a positive cash flow each month and have barely touched our investments and then only for special purchases.