According to Merriam-Webster, one of the definitions of wealth is an abundance of valuable material possessions or resources. Per a new survey that recently came out, many Americans feel you need a lot of valuable material possessions – to the tune of $2.2 million – to be considered “wealthy.”
CNBC is reporting on a recent survey from Charles Schwab’s Modern Wealth Survey that Americans now believe you need a net worth of $2.2 million to be considered wealthy. This is a jump from the number of $1.9 million in 2021. Understandably so, as economic situations have changed, so too have Americans’ view of what it means to be wealthy and their outlook on money.
What is vital, though, is thinking beyond your net worth, such as considering how much savings are required to be able to afford what you think you may spend each year in retirement. As an example, using the 4% rule, which is covered in one of my favorite books, Financial Freedom by Grant Sabatier, future retirees who plan on living off $50,000 a year will need to save $1.25 million to get them through the rest of their non-working lives. Of course, things like market volatility and cash reserves could affect this.
So How Much Will This Cost Me?
In their post, CNBC used an investment calculator to figure out how much you would need to invest, ending with $2.2 million. Granted, inflation this year could influence any potential numbers. Still, if assumed one was starting with $0 and earning a modest 7% average yearly return after adjusting for inflation, the average stock market return is historically 10% annually before adjusting for inflation. That said, here’s how much you would need to kick in each month to reach a $2.2 million portfolio value to be considered “wealthy.”
- Invest $12,861.61 each month for 10 years to reach $2.2 million
- Invest $4,334.66 each month for 20 years to reach $2.2 million
- Invest $1,881.22 each month for 30 years to reach $2.2 million
- Invest $890.13 each month for 40 years to reach $2.2 million
- Invest $437.12 each month for 50 years to reach $2.2 million
TL:DR – there’s no time like the present to start investing now, especially if you are fortunate enough to have time on your side. Also, if you’re looking for an easy and customizable Excel sheet that can you help you crunch the numbers to your own situation, be sure to check out the template I created here! As a bonus for being a reader of this site, use promo code “MITTEN20” and get 20% off! Thank you for your support!