How much does it take to get rich in America? | personal financing
Most people want to be rich so they don’t have to worry about money. But what would it take to achieve that goal in America?
According to a 2022 Schwab Modern Wealth survey, the magic number is $2.2 million. That’s up from $1.9 million, which is the average net worth Americans indicated would make someone rich in 2021. However, it’s down from the $2.6 million they said was necessary near the start of 2020 before the COVID-19 pandemic.
If you assume that survey respondents are right and that a net worth of $2.2 million is needed to be wealthy, the big question is: What does it take to collect that many, and is that number within reach?
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How to increase your net worth to $2.2 million
Since this $2.2 million figure indicates average net worth, the collective value of all your assets minus all of your debts should be at that level.
Your assets can include your investments, as well as your homes, vehicles, and other personal possessions. However, if you have a mortgage or car loan, you will need to put up all of that debt, so you will need to liquidate the $2.2 million after all you have paid off.
This could mean someone owning a $2.5 million home, but a $2 million mortgage would need an additional $1.7 million in assets to get enough money to be considered wealthy.
Are you getting rich at hand?
Amassing a net worth of $2.2 million is not easy, which is not surprising. Most people are not wealthy, so understandably it would be difficult to have enough money to be categorized in this way.
But that doesn’t mean it’s unattainable. If you invest wisely, start investing early in your life, and generate a reasonable amount of income so you can allocate a portion of it, it should be possible to amass a net worth of $2.2 million. The trick is knowing how much you’ll need to save and what your investment returns need to be in order to end up with enough.
There are calculators on Investor.gov that can help you figure this out. To take a simple example, let’s say you own $500,000 in other free and obvious assets (including your home and other property). You’ll need to save another $1.7 million. If you start investing at the age of 30 and want to be considered wealthy by the age of 60, you will need to invest about $862 per month To achieve this goal if you earn 10% average annual return. This is possible if you have a family income of about a dollar68960 and save 15% of your income.
Remember, however, that in addition to investing, you’ll also want to focus on paying off your mortgage, acquiring other assets that increase your net worth, and keeping your debt to a minimum, because these factors also affect your ability to get the $2.2 million it should be. Net wealth is rich.
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