Millions Not Enough — Why Mindsets About What’s Considered ‘Wealthy’ Are Changing Amid Recession Fears

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The standard for what makes Americans wealthy has never been clearly defined, though you could usually qualify by being a millionaire. That’s no longer the case — at least according to a large percentage of respondents to a new survey from Edelman Financial Engines, a Boston-based investment advisory firm.

Edelman’s Everyday Wealth in America report, based on a survey of more than 2,000 Americans and released on Dec. 7, found that only 12% of Americans — and 29% of actual millionaires — feel “wealthy.” While the majority of respondents (57%) said they would feel wealthy with $1 million in the bank, that wasn’t the case with people defined as “affluent” (those with household assets between $500,000 and $3 million).

According to the survey results, more than half (53%) of affluent respondents said they would need more than $3 million to feel wealthy, while one-third would require more than $5 million.

Edelman’s research revealed that macro issues such as inflation and recession fears topped the list of financial concerns for survey respondents, with inflation causing the greatest worry. ​One result is that people are changing their spending and saving strategies and also making more investment decisions based on emotions — something that can easily derail them from achieving their long-term financial goals.

“At a time when inflation and stress levels are up, and markets and portfolios are down, our research exposes a stark contrast between being wealthy and feeling wealthy,” Jason Van de Loo, Edelman’s head of wealth planning and marketing, said in a press release. “For many people, worries about money can override basic facts, which can often lead to confusion and frustration.”

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Eight in 10 respondents said they’ve had to adjust their financial thinking in response to rising prices and the impact of the sluggish stock market on their portfolios. Even the affluent have had to tighten their belts, with three quarters making some type of financial sacrifice and 17% putting less money into their retirement accounts.

Perceptions of wealth differ according to where you live. For example, the Charles Schwab Modern Wealth Survey 2022, released earlier this year, found that you would need more than $5 million to be considered wealthy in San Francisco. Next highest on the list was Southern California — where you would need $3.9 million — followed by New York City, where you would need $3.4 million.

Even cities not located in pricey coastal enclaves have high bars for wealth. Among the cities that would require at least $2.3 million to be considered wealthy are Atlanta, Chicago, Dallas, Denver, Houston and Phoenix. Overall, the Schwab survey found that you would need $774,000 to be considered “financially comfortable” in the United States.

Meanwhile, you would need a net worth of $4.4 million to be a member of America’s 1%, according to the Visual Capitalist website, which cited research from real estate consultancy Knight Frank. In comparison, you would need only $1.5 million to reach that status in Japan, $1.8 million in the U.K. and $2.8 million in Australia.

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