There’s a wealth paradox in America, driven by the contrast between how people define wealth for themselves compared to how they define it for others, according to Schwab’s seventh annual Modern Wealth Survey, an examination of how Americans think about saving, spending, investing and wealth.

When asked to express how much money it takes to be considered “wealthy” in America, 1,000 survey respondents across the country say it’s an average of $2.2 million. But among the 48% of Americans who say they already feel wealthy today, the average net worth is $560,000—about a quarter of that loftier target. What’s more, non-financial assets like health and family resonate far more when defining wealth than having large sums of money, according to Schwab’s survey.

Nearly two-thirds of Americans (62%) say being able to enjoy healthy relationships with their loved ones better describes wealth than having a lot of money and seven in 10 say wealth is more about not having to stress over money than having more of it. In fact, when asked to characterize what it means to be wealthy in their own words, Americans mention their well-being (40%) more often than money (32%) and assets (26%).

These leanings are even stronger among older generations, with eight in 10 Boomers saying wealth is more about enjoying experiences (79%) and not having financial stress (83%) than having nice things or accumulating more dollars.

“Americans today aren’t as worried about keeping up with the Joneses, and more importantly, they understand that they can be happier with fulfilling experiences and relationships, even if they have less money than them,” said Jonathan Craig, Managing Director and Head of Investor Services at Charles Schwab. “We’re seeing these trends at Schwab as well. First, when people think about managing their finances and building wealth, it’s so much more personal than just money and investments. How they invest and what they invest in reflects their unique goals and passions. Second, Americans want the ability to manage their money and investments without traditional barriers such as high minimums and fees to access financial services and help.”

According to Schwab’s survey, only about one-third (35%) of Americans have plotted their goals and documented a financial plan. Among those who do, seven in 10 say it makes them feel more in control of their finances and nine in 10 say they feel confident that they will reach their financial goals.

And while people feel wealthy, they don’t think their wealth merits a plan: among those who don’t have a plan, most say it’s because they don’t have enough money (44%), it’s too complicated (21%) or they don’t have enough time (20%).

“It’s easier and more affordable to get a financial plan today than it’s ever been before, whether people want to just get started with a do-it-yourself digital financial plan or have an in-depth conversation with a professional,” said Rob Williams, CFP®, Managing Director of Financial Planning and Wealth Management at Charles Schwab. “And once clients start the process, they realize it’s not a conversation about how to get to a certain dollar amount. We talk to people about their personal goals and values to understand how they want to live their lives and to create a roadmap that makes some of life’s biggest aspirations much more accessible. Investors can also go a step further, and personalize their investments not only based on their circumstances and goals, but also align them with their personal passions, values, and interests.”

Toxic scrolling: Social media influences and distractions

While having good relationships with family and friends is an important part of how Americans view wealth, Schwab’s survey also shows that social media can create new uncertainty and doubts for Americans when it comes to how wealthy they feel and resurface the tendency to compare themselves to their social circles.

Nearly half (47%) say being able to afford a lifestyle comparable to their friends makes them feel wealthy, and among those who use social media, more than one-third (37%) say they compare their lifestyles to what family and friends share on social media. About one-third also say they make purchases (34%) based on what they see on social media from friends and influencers, as well as financial decisions (33%) and investment decisions (33%).

The impact of social media is far greater among younger Americans:

“Whether it’s the fear of missing out or the desire to keep up, there are many factors that can make you feel pressured to spend money on things that may not have long-term value,” said Williams. “Thoughtful planning can help you be clear-eyed about your own goals, invest in a way that enhances your life and take control of your financial future.”

Planning tools and resources

Schwab has an online Financial Planning Hub that features an array of goals-based calculators, tools, and educational planning content to help investors get quick answers on topics such as retirement, saving for college, and buying a home. Investors can find out if they are saving enough for retirement, determine how much they can afford to withdraw in retirement, get an estimated monthly college savings goal, and plan for a home purchase using a mortgage calculator. The Financial Planning Hub is available to both Schwab clients and non-clients.

Schwab also offers a range of options for clients to create a financial plan, including a free, self-guided digital financial plan with no minimum asset requirement to help investors establish and stay on track toward their retirement goals. Clients can also get 1:1 access to professional planners and a more in-depth and comprehensive financial plan by working with one of Schwab’s financial consultants in a local Schwab branch. With Schwab Intelligent Portfolios Premium, clients can receive unlimited 1:1 guidance from a CERTIFIED FINANCIAL PLANNER™, interactive planning tools, and a personalized plan.

About the Modern Wealth Survey

The online survey was conducted by Logica Research from March 1, 2023, to March 13, 2023, among a national sample of 1,000 Americans aged 21 to 75. An additional 200 Generation Z Americans completed the study. Quotas were set to balance the national sample on key demographic variables. Detailed results can be found here.

Disclosures

Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures relating to Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.

Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® are made available through Charles Schwab & Co. Inc. ("Schwab"), a dually registered investment advisor and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. ("CSIA"). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation.

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or geopolitical conditions.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 34.2 million active brokerage accounts, 2.4 million corporate retirement plan participants, 1.8 million banking accounts, and $7.63 trillion in client assets as of April 30, 2023. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, https://www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at https://www.aboutschwab.com.

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