The pandemic reshaped Americans’ definition of wealthy

Wealthy person
Americans have lowered the bar for wealth. Edward Berthelot/Getty Images
  • Americans think $1.9 million is wealth – $700,000 less than what they said pre-pandemic, per a new Charles Schwab report.
  • They also lowered the bar for the net worth they believe is needed for financial happiness.
  • The changes are a result of Americans reprioritizing their values during the pandemic.
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The bar for being rich isn’t as high as it used to be.

Americans have shifted their definition of wealthy in the wake of the pandemic, according to Charles Schwab’s 2021 Modern Wealth Survey, which polled 1,000 Americans. Respondents said they believe it takes an average $1.9 million net worth to be considered wealthy – $700,000 less than the $2.6 million that signified wealthy in 2020’s pre-pandemic version of the survey.

They also dropped the benchmark for the amount of wealth needed to achieve financial happiness and financial comfort. In their eyes, it now takes an average net worth of $1.1 million to be considered financially happy, compared to $1.75 million a year ago. For comfort, expectations dropped from $934,000 to $624,000.

These changes are part of a larger reevaluation among Americans caused by the pandemic, the survey found.The majority (68%) have reprioritized their values, and 69% feel mental health is more important than before, followed by 57% who are placing new emphasis on relationships. Financial health comes in third on the list, at 54%.

Rob Williams, vice president of financial planning at Charles Schwab, said in the report that while the pandemic caused Americans to place more emphasis on health, the recession also taught many the importance of financial planning.

“The pandemic and the significant impact it had on the economy and stock market also taught us a valuable, and in many cases difficult, lesson about the importance of financial health and preparedness, including the importance of having a plan and emergency savings,” he said.

Another recent survey which examined wealth perceptions in the US, by Boston Private, found that affluent millennials were the likeliest wealthy cohort to say the pandemic altered the way they define wealth. More than three-quarters felt this way, compared to less than a quarter of high-net-worth baby boomers and silent generation members.

As the economy shut down, those fortunate not to experience job loss were able to tuck away discretionary savings or invest in a rebounding stock market. Saving has been up across the board during the pandemic, as the US household net worth hit a record high in the fourth quarter, up 5.6% from the third quarter. Americans were sitting on $2.6 trillion in excess savings as of mid-April, per Moody’s Analytics.

The rich have gotten richer as the coronavirus recession took on a K-shaped recovery in which the wealthy were doing just fine and the poor continued to struggle. As wealth inequality grows, wealth seems to mean less to some Americans than it previously did.

Perhaps, in a pandemic, people have realized that money can’t buy everything.