Survey: What does it take to be wealthy?

Pandemic has changed the way Americans think

Chalk up yet another way the COVID-19 pandemic has upended lives and perceptions: The crisis has changed the way Americans view wealth.

They now believe that, on average, it takes $655,000 to be financially comfortable, down from $934,000 in January, according to Charles Schwab’s 2020 Modern Wealth survey. And they think the minimum benchmark to be considered wealthy is $2 million, down from $2.6 million in January. The survey of 1,000 Americans was conducted for Schwab by Logica Research June 25July 2.

“The drop in what Americans think it takes to be wealthy might be a result of people being more grounded about wealth perceptions and goals in such an uncertain environment and coming out of pretty significant market volatility and uncertainty in March and April,” said Joe Vietri, Schwab’s senior VP and head of its branch network.

As many as 50 million U.S. workers have been laid off, furloughed or seen their hours or pay reduced during the pandemic, according to unemployment benefit claims tracked by the Labor Department. Many of those affected are low- and middle-income households who work in the restaurant, hotel and retail industries, which largely shut down in March after most states issued stay-at-home orders to curtail the spread of the virus.

States are gradually reopening, though many have partly closed down again after infection spikes.

Retail spending plummeted in April but rebounded sharply in May and June. Much of the comeback has been linked to higher-income Americans who largely have been able to work from home during the shutdown.

Overall, 57% of Americans have been financially impacted by the pandemic, including 68% of millennials, the survey found. Thirty percent – 41% of millennials – suffered a cut in salary or hours. A quarter said they or a close family member were furloughed or laid off.

And although the crisis has forced many people to draw from savings to pay rent and other bills, 36% of those surveyed say they’re more likely to have savings to cover emergency expenses than before the outbreak and 40% say they’re saving more in general. That compares with 21% who say they’re less likely to have both emergency and general savings.

“People are showing more concern about reaching their financial goals right now than prior to the outbreak … and it’s possible that recent volatility and uncertainty in the market is leading them to take saving more seriously than they have in the past,” Vietri says.

More people, however, are shying away from investing in stocks, which have recovered about 90% of their losses early in the crisis, according to the Standard & Poor’s 500 index, but remain volatile. Nineteen percent of those surveyed said they’re more likely to invest more in the stock market than before the outbreak, while 31% said they’re less likely to ramp up their investments. Other findings.

A quarter of those surveyed say they’re very confident in reaching their financial goals, down from a third in January.

52.5% say they’re financially stressed, up from 45.9% before the crisis.

39% say relationships are most important to their overall happiness, followed by health (27%) and money (17%). Pre-crisis, relationships led at 36%, followed by health (30%) and money (16%).