What it means to be rich in the USA

There is no simple answer to how wealthy someone is, because it obviously depends on many things, not only income and personal situation, but also where you live and the cost of living.

However, there are tools we can use and studies that show us what we think the average income in the US might be and how much money Americans think you need to be considered wealthy and wealthy.

How much is considered rich in the USA?

Since 2017, Charles Schwab has been examining what it means to be rich in the United States in his Modern Wealth Survey. It collects data on how Americans earn, spend and invest and also reports on their financial ambitions.

The 2024 report concludes that Americans expect the average net worth to live a comfortable life to be around 50% $778,000. The study shows that 21% of Americans believe they are on the path to a wealthy lifestyle, with Generation Z and Millennials being more optimistic (29%).

The same study also shows that Americans feel that being wealthy in the US means having an average of $1.5 million $2.5 millionan increase from $2.2 million compared to 2023 and 2022. Baby boomers believe this number should be slightly higher at $2.8 million, but Generation Z and Millennials believe it is lower amount could feel wealthy.

In terms of location, Californians believe that it takes more money to live a wealthy lifestyle ($3 million to $4 million instead of the national average of $2.5 million), while the threshold for this is among residents of Atlanta, Chicago, Houston, Phoenix and Dallas are considered wealthy and are below the national average.

How rich is the average person in the USA?

So how wealthy are Americans? The Census Bureau estimated the average American household income $80,610 Based on 2023 figures, to be in the top 20% of income, you would have to earn almost twice the average, which equates to an income of over $130,500 per year.

To be considered a true top earner in the US, we could go by the IRS’s benchmark of what the top 1% of Americans earn – over $540,009 puts you in the top 1% from a tax perspective of the employed. However, the Economic Policy Institute estimates that to be in the top 1 percent earners, you need to earn $819,324 per year. This means you need to make either $45,000 or $68,277 per month, depending on which metric you use. It’s still a lot.

The Pew Research Center found that, based on the most recent government data, about half of American adults (52%) live in middle-income households in 2022. Of the remaining adults, 28% live in low-income households and 19% live in higher-income households.

Average state salaries in the US and what it takes to be middle class

There are significant differences in average salaries from state to state, reflecting the varying economic strengths of each state. Forbes notes that average salaries are higher in Massachusetts, New York and California (between $76 and $74,000 per year) than in Mississippi, Arkansas and West Virginia (where the lowest average salaries are found at $45 to $49,000 per year are).

A 2023 SmartAsset study examined what it takes to live a middle-class lifestyle in 100 of America’s largest cities and 50 states. The results showed that salaries in the Northeast were 20% higher than in the South, even when compared to the cost of living.

In Maryland, Washington DC and Massachusetts, an annual income of $60,000 is required to be considered middle class at the state level. In Mississippi, the state with the lowest annual income requirement, it is $32,640. West Virginia ($34,336), Louisiana ($34,898), Arkansas ($35,194) and Alabama ($36,122) come close.

The minimum threshold to be considered middle class in Fremont, California is around $110,000, but you would still be considered middle class if you made $310.00 in Fremont, since it is the city with the highest middle class upper limit (due to their proximity). to Silicon Valley and tech jobs).

Another indicator of how financially comfortable a person is can be measured by how much they can spend on non-essential items. Most online financial influencers cite a balance of around 50/20/30 to ensure you can live comfortably and future-proof your life financially. Your living expenses should make up 50-60% of your income, so things like rent, mortgage, groceries, bills, and so on. The 20% refers to either paying off loans or putting the money into savings and investments or simply putting money aside in the bank. And your “fun bucket” should be about 20-30% and cover gifts, hobbies, memberships and nights out.

The cost of living in the USA

While one aspect of wealth concerns income and assets, the other side is the amount of money you have, which can depend on inflation or taxes. A family of four across the U.S. could spend just over $4,000 on costs, not including rent, while a single person could spend $1,166 per month.

For comparison, the average cost of living in the US is 7% higher than if you lived in France.

ForbesWhat it means to be rich in FranceFrom Alex Ledsom

Wealth calculator for the USA

You can use a few calculators to see where you stand on the wealth scale compared to your fellow Americans. The Pew Research Center has a U.S. wealth calculator that takes your state into account and tells you whether you’re middle class in America.

And The Washington Post has an Are you rich? Calculator that measures your net worth based on your age, education level and income.

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