What or who determines how wealthy an individual is? According to experts, wealth is subjective.
“Wealth is in the eye of the beholder,” Tiffany Welka, an accredited wealth management advisor with financial firm VFG Associates in Livonia, Michigan, told U.S. News.
For instance, respondents of a 2019 YouGov survey said that earning $100,000 a year is the benchmark for being rich.
Statistically, high median earnings vary from one state to the next, but the top 10% of earners in the U.S. bring in about $163,000 to $362,000 a year.
The IRS has its own standards for wealth, as well. Single taxpayers with an annual income of $518,400 in 2020 hit the top tax bracket of 37%; married couples filing jointly require an income greater than $622,050 to be in the top tax bracket. That said, people earning $200,000 annually could be considered wealthy when it comes to tax breaks available to those with lower incomes.
“Once you get past $200,000, you’ve probably phased out of many tax benefits,” Jamie Hopkins, director of retirement research at Carson Group, a financial firm headquartered in Omaha, Nebraska, told U.S. News.
But it might surprise you to learn how different generations view wealth. In its 2021 Modern Wealth Survey, financial services company Charles Schwab discovered that wealth expectations varied greatly between Millennials, Gen Xers and Baby Boomers.
According to the survey results, Baby Boomers, born between 1946 and 1964, believe a wealthy person has a net worth of $2.5 million or more. People in Generation X (born between 1965 and 1980) put that number at $1.9 million, and Millennials (born between 1981 and 1996) have an even lower number in mind with $1.4 million.
These current numbers have likely been influenced by the pandemic, since many people surveyed experienced job loss or reduced income during this period. However, the differing views are also due in part to life experience. In their 20s, 59% of Baby Boomers lived in middle-class households. For Millennials, that percentage dipped to 53%.
If you wonder how your net worth compares, you can calculate it by subtracting your liabilities from your assets. Assets are anything you own that you could convert into cash, and liabilities are debts.