How Much Money Do You Need to Be Rich?

Think you know what it takes to be rich in America? How much is enough to afford a rich lifestyle, and what does being wealthy actually mean? 

Surveys and data find a surprising snapshot of these constantly moving financial goalposts. While there certainly are thresholds that make a person wealthier than most, that doesn't necessarily mean they consider themselves "rich." After all, being rich might be nothing more than a state of mind — or another person's perceptions. 

Most Americans feel they need to make over $186,000 a year, on average, just to live comfortably, according to a 2024 Bankrate study. That's two times more than what the average full-time, year-round worker earned in 2022 (about $79,000 according to Census Bureau data). Just 25% of Americans say they are completely financially secure, down from 28% in 2023, and 30% of individuals who are not completely financially secure believe they likely never will be.

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That study also found that in order to feel rich, Americans believe they need to make $520,000 on average, an 8% increase from $483,000 in 2023. However, how much you actually need depends on what you personally consider "rich." You may be experiencing "lifestyle inflation" where the more money you make, the more you think you need to earn to be financially secure. 

Or maybe you live in a state where you'll need to earn a hefty salary to be among the top 5% of earners. For example, the median income of the top 5% is more than $500,000 annually in Washington, California, Massachusetts, Hawaii, Virginia, Colorado, New York, New Jersey, Illinois, Maryland, Connecticut and the District of Columbia, according to a GoBankingRates study looking at how much the definition of rich has changed in each state. 

Meanwhile, the median income of the top 5% is less than $400,000 annually in Arkansas, Maine, West Virginia, Kentucky, Mississippi, Alabama, Indiana, South Dakota, Louisiana, New Mexico, Oklahoma and Iowa.

Certainly, relativity matters in how much you need to be considered rich. 

Relativity also includes age. The two youngest adult generations self-reported the highest levels of financial comfort in a Charles Schwab survey. Roughly six in 10 millennials and five in 10 Gen Zers reported feeling wealthy, while only four in 10 Gen Xers and four in 10 Baby Boomers said the same. 

Some of this could be down to younger generations having more optimism due to the longer runway in front of them before retirement. A study on Gen Z saving habits revealed Gen Zers dedicating an impressive 20% of their salary towards retirement — markedly higher than millennials, Gen X and boomers — while starting at a much earlier age than older generations.  

What net worth is considered rich?

The previous numbers looked at income, but what about net worth? An average net worth of $2.2 million is needed to be considered wealthy, according to Charles Schwab's 2023 Modern Wealth Survey, which asked 1,000 adults aged 21 to 75.

Timing also matters, though. That net worth number in unchanged from the previous year, but still well below the high mark of $2.6 million recorded in Schwab's pre-pandemic 2020 survey, so perceptions certainly changed, in spite of inflation.

Schwab's survey also reveals that roughly half of respondents say they already feel wealthy today, despite having an average net worth of only $560,000. This total represents only a quarter of the consensus threshold of being rich in America. So, what's going on here? 

The survey authors explain that factors like family strength and good health increasingly factor into respondents' calculations of what "wealthy" means. According to the data, four in 10 Americans define wealth in terms of "well-being," while only three in 10 describe it in terms of "money."

Digging further into the surprising data, respondents chose "enjoying experiences" over "owning nice things" by a ratio of 70% to 30%. They picked "healthy work-life balance" (69%) over "maximizing my earnings" (31%), and they preferred "enjoying healthy relationships with my loved ones" (62%) to "having a lot of money" (38%). Finally, respondents agreed that "having time" (61%) is more important to them than "having money" (39%).

Jonathan Craig, managing director and head of investor services at Charles Schwab, said, “Americans today aren’t as worried about keeping up with the Joneses, and more importantly, they understand that they can be happier with fulfilling experiences and relationships, even if they have less money than them.” 

The basics of building wealth

It's possible to build wealth at any age. Follow these wealth creation basics to steadily improve your financial picture:

• Start investing early in a steady portfolio that doesn't chase returns and has an appropriate risk profile for your age and financial picture. The easiest set-and-forget portfolio relies mainly on low-fee, market-tracking ETFs. 
• Max out your savings in your company retirement plan to take advantage of tax-free savings growth and company matches (or "free money"). Self-employed workers can contribute to solo 401(k) plans, which allow you to contribute far more because you're both employer and employee. 
• Pay off high-interest debt. Credit cards have an annual interest rate of 24.59%, according to Forbes. These sky-high interest payments can eat away at any wealth building progress you're making elsewhere. Consider using a balance transfer credit card with 0% APR to get a breather from excessive interest while you whittle down your debt. 
• Watch your taxes. Adjust your withholdings to reduce your tax refunds and limit the amount that you're essentially loaning the government for free each year. Consult a tax planner or other tax resources to take advantage of all the deductions available to you.
• Boost and then protect your credit. Good credit raises your financial ceiling by unlocking the lowest rates on loans and even helping with your job search. Check your credit score at a free site such as CreditKarma or FreeCreditScore. Then get to work raising your score by paying off credit card debt, paying bills on time, raising your credit limit, and even requesting the removal of negative information like bankruptcies and collections. 

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