The American Perspective Of Wealth
If someone asked you what “rich” means to you, what’s the first thing that would come to mind? Some would say a career that pays well, while others find joy in the simple things. From monetary possessions like a big house or flashy car to less tangible benefits, achieving wealth means something different to everyone. In short, that there’s no one factor that can make you feel rich and wealthy.
There’s alot of wealth in America
In 2018, American households held over $98 trillion worth of wealth. Wealth, or net worth, is defined as total value of assets minus the total liabilities. Assets are resources with economic value, think houses, retirement funds, and savings accounts. Liabilities, or debt, are the opposite; think mortgages, student loans, and car loans.
In 2018, U.S. households held over $113 trillion in assets. For context, that is over five times as much as all the goods and services produced in the U.S. economy in a single year. If that amount were divided evenly across the U.S. population of 329 million, it would result in over $343k for each person. For a family of three, that’s over a million dollars in assets.
Almost three-quarters of aggregate household assets are in the form of financial assets, namely stocks and mutual funds, retirement accounts, and closely-held businesses. Real estate makes up a vast majority of the nonfinancial assets.
Men are more likely to associate wealth with money
A survey found that the most popular definition of wealth among men is “being able to afford the life you want,” with 40 percent of the participants choosing this response. This also was the most popular definition of wealth for women, with 34 percent choosing this answer. Additionally, 5% of men chose “earning a lot of money through your job” as their definition of being rich, compared to 4% of women. However, an almost equal 28% of women and men said that being rich means living a happy life, no matter how much money you earn.
What income is considered rich?
How much money does it take to be rich? The top 1% in the U.S. earns an average annual income of over $500k. To be among the richest 1% in the world takes over $744k in net worth, while to be in the richest 1% in the U.S. takes closer to $10 million in net worth. Wealth is relative depending on who you’re comparing something to, and what is considered “rich” varies by your age. The Federal Reserve found that net worth tends to increase with age and eventually plateaus or decreases near retirement.
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