Study Finds The Net Worth That Makes you Wealthy (And the Major Factor it’s Missing)

In pursuing financial security and happiness in retirement, many rely on benchmarks and studies. However, recent findings reveal that assessing wealth solely through net worth may be incomplete. A Charles Schwab study offered insights into how people perceive wealth and success, challenging the notion that $2.2 million is needed to feel wealthy. Surprisingly, 48 percent of respondents felt wealthy with an average net worth of $565,000, prompting a critical examination of true wealth.
Approaching these findings with discernment is essential, considering survey limitations. For example, baby boomers felt affluent with a higher average net worth of $692,000, highlighting the impact of life stages on wealth perception. More importantly, respondents emphasized fulfillment, experiences, and generosity over financial metrics, indicating a shift in retirement planning towards holistic well-being.
While the study links financial planning with confidence in achieving life goals, it overlooks the importance of cash flow and the fallacy of equating net worth with happiness. True prosperity extends beyond finances, embracing broader aspirations and values. As retirees navigate financial planning, combining prudence with holistic well-being can unlock the true essence of wealth in retirement: a life rich in purpose, experiences, and connection.
=======================
Learn the tips & strategies to get the most out of life with your money.
Get started today → www.rootfinancialpartners.com/
Get access to the retirement software I use in this video and more → retirement-planning-academy.m...
🔔 Make sure to subscribe here to be notified for future videos!
/ @rootfp
_ _
👥 Make sure to connect with us on all socials below → beacons.ai/rootfinancialpartners
⏱Timestamps:⏱
0:00 - The Charles Schwab study
1:22 - What it takes to feel wealthy
3:18 - A written financial plan
4:20 - The importance of cash flow
5:58 - Net worth should fund fulfillment
Other videos we think you'll like:
About Root: • Financial advisors wit...
Worried about retirement?
Start here: • Worried About Retireme...

[@jameschaves5723]

Bottom line…no amount of money will make you feel wealthy if you don’t have your health!!!

[@Buckaroo801]

Health = wealth

[@kennethtaylor1588]

Millions have good health and are broke AF. Clichés don't expand understanding

[@GotGracexxxxx]

What good is health? You can’t buy money with it.

[@lewiskent5684]

Yeah, this isn’t a health and fitness video.

[@josephmarinucci9073]

The number is going to vary for different people. Prior to retirement, I never felt wealthy. Even after retirement, our numbers would not impress most people. However, our modest home and two cars are paid, and we have no other debt. We have some money in investments, savings, and an emergency fund. Cash flow includes my social security income and a small annuity, which are enough to cover our monthly living expenses. That leaves our savings and investments free to grow. It may not seem like much on paper, but it sure feels like wealth to me.

[@lewiskent5684]

It appears you are financially independent or financially free. This is my opinion a more meaningful term than wealthy and what I am most interested in to gauge my readiness for retirement.

[@montrisrestapunte2037]

It’s true I’m a single male 75 year old with 750K in equity (457b+IRA)and 71K of pension plus social security combined annually. With RMD in addition to my pension, I live very comfortable with great health. Good Health is actually great wealth.

[@M22Research]

“Comparison is the thief of Joy” From a financial perspective, most folks likely “feel wealthy” in direct relationship to the amount their income exceeds their needs. These values will vary greatly by person.

[@janethunt4037]

No one wins in the comparison game. Either you feel defeated or better than everyone else.

[@joycewright5386]

Amen! With zero debt I can live quite comfortably on my social security. Retired 6 years and still haven’t touched my savings.

[@lewiskent5684]

Comparisons can be useful to understand if you are on track.

[@missgui4400]

Some people will never feel wealthy even when they have millions of dollars because they lack contentment.

[@lewiskent5684]

Some people will never feel wealthy because of how they define wealthy.

[@jkso6343]

'It's not just our net worth that makes us feel wealthy, it's cash flow' - so true!!!! Recently, I've been deep into my financial reviews and adjustments to my plan. I've felt this strong. My net worth is great, but the cash flow stresses me out. It took me some time to figure this out - now I've experienced this and agree 100%!!

[@flygirl5633]

Thank you for addressing the difference between net worth and cash-flow! Recent retiree here, still struggling to achieve the equilibrium of being prudent and making sure not to run out of money and giving myself permission to spend some "fun" money. It is not easy to undo the mindset of saving, saving, and more saving! :)

[@pensacola321]

It takes a bit of time to get your spending sea legs. But life is short, don't wait too long.

[@johnkenney7217]

My test for being wealthy is feeling like I can afford to fly better than coach class. By that measure, I’m not sure I will ever get there.

[@leeharrell777]

I feel ya. Check out travel credit cards that allow you to get free business class with travel points. Not that hard to do!

[@markb8515]

Thanks James for another very informative video!

[@dorinatudisco1308]

Great video. Just subscribed!

[@mikecho4998]

James - Thanks for all your videos. Very informative! Wife and I are 58. Teachers. Considering retiring in 2 years and researching now by watching a lot of YT videos. Our net worth is comfortable. The thing that is SUPER hard to find on YT is how our large pensions factor into both our cash flow and Net Worth. Would love a video on that James.

[@AlexFlavell]

My parents are both teachers. The advice I’ve seen is to calculate the entire value of the pension once you collect (let’s say from 60 until death, approx. 85, so whatever your annual pension amount is x [85-60=25]). That makes it a much more tangible item to calculate in addition to other sources of fixed income. Hope this helps 🙏

[@mikecho4998]

@@AlexFlavell Thank you Alex.

[@markwat54]

Excellent video bringing up points that I very rarely hear. Your content is always rock solid. I wish you offered a one-time plan option, and not just an assets under management option.

[@kwilliams1958]

Great global comprehensive analysis...excellent notes.

[@OllertonMD]

Amazing content man. I've been listening to your podcast from the beginning and am enjoying the videos now too. You and your company give off zero "fake guru vibes" and appreciate the psychological aspects of the intersection between finance and happiness. Do you guys charge per hour, or is it a % of net worth of the client, for payment?

[@genglandoh]

Great point and I have been thinking the same way about our retirement. When looking at can you retire don't look at net worth look at your expenses and income (cash flow). For example if you own a home having it paid off does increase your net worth but more importantly it reduces you expenses and gives you some protection from inflation. Our retirement plan has been to look to increase income, reduce expenses, basically increasing our cash flow. For example I am retiring in 14 days at 67 1/2 but will take my SS at 70. This will cause us to withdraw a more from our investment for the 1st 2 1/2 years of retirement. After SS starts we can reduce the amount we will withdraw from our investment for the rest of our life. It will also help protect us from 1. Living a long life 2. Inflation (SS is adjusted for inflation and having 24% more they amount we will get from the inflation adjustment will be more) 3. When one of us dies.

[@janethunt4037]

Great points, James. I'm often amazed at what people think they need to spend $$ on.

[@billyjohnson9166]

Cash flow as Kevin O’Leary says. I like having cash flow and net worth a perfect combo.

[@by9917]

I've never had a written financial plan. I'm a happy with my situation and my job. Using the 5% draw down value regularly mentioned here and SS, I could today make more being retired than I do working. I don't consider myself wealthy, just comfortably well off. For the most part I have more than I ever expected to have, and have done more than I ever planned to do. Maybe I am missing something, and maybe ignorance is bliss. Until I find something better to do, I'll keep working the job that's better than I ever imaged a job would be.

[@spinnetti]

Same here lol. I blew past my wildest dreams years ago. I'll keep working till I don't feel like it, then do something else.

[@anthonyvanburen3998]

My wife and I have 1.4k in net worth, another 600k in home equity, and cash flow in the name of military pension, Gov pension, and VA disability compensation. Social security x 2 coming in 4 years at 65 and 67 years old. Having continuous passive income (cash flow) in retirement is more comforting than net worth. Our situation came through trial and error, learning and growing over 40 years. Nothing special just time and making a few good decisions.

[@ThisJust-In88]

I feel like the net worth discussion should always be dependent on the age of the individual. If you talk to someone with a million dollars but they're in their 60's they may not feel wealthy, but a million dollars for someone in their 30's or 40's would be totally different. For younger people, feeling wealthy probably comes more from your income and later on it comes from your net worth.

[@theorydude]

Thanks, very helpful. The psychology is really the issue, and cash flow is the true measure. For instance, I consider the true value of our house to be security, comfort, and generational wealth; the market value is almost meaningless, as I don't intend to tap the equity through a 2nd mortgage nor sell it. In addition, since we have pensions, measuring our net worth through investment portfolios is also not accurate, as we won't primarily rely on those - since these are so rare, almost no one discusses them. There are formulas to calculate the "net worth" of a pension, and it's comforting to look at, but again, it's a "pretend" number. As James argues here, having an accurate knowledge of your cash flow is the true measure of "feeling" wealthy: if you feel mostly free to spend as you like, that's the most practical definition of wealth. My 2 cents.

[@TheRemyRomano]

That’s right. many people don’t need more money. They need a better plan.

[@zackdreamcast]

💯 cash flow is king to feeling wealthy.

[@headlibrarian1996]

I would argue that $575k should feel quite ok to a 70 year old, much more than, say, a 60 year old. They are, after all, in the spend-down phase and usually don’t have a lot of years left. $2.2 million “feels wealthy” because you’ll probably have more money when you die than you have now, with an upper middle class lifestyle. Basically, you can’t run out of money unless you’re stupid.

[@MKF1205]

Isn’t it fairly easy to turn the non house part of the net worth into cash flow? Once you have enough money outside the house, do you really need to worry about cash flow?

[@philiptornelli3477]

I don't believe its that hard to value a pension such that it can be added to net worth. For example, a 60K pension can be divided by a projected growth rate to show it in the form of estimated net worth. For example, 60k annual pension/5% conservative growth rate would equate to ~ 1.2 million in additional net worth. So the pensioner with 700K in savings plus the pension has an equivalent net worth of 1.9 million.

[@July.4.1776]

It’s interesting that the oldest baby boomer is nearing 80 years old vs the youngest which is just over 60 🤔

[@geminiecricket4798]

Baby Boomer here with 4 grandchildren and now at 2024 my total wealth seems lacking. At 71 unless I write a best selling novel there is not (what I perceive) enough for all !

[@andrewrivera4029]

What ever the number is, it’s always more than I got.

[@johnnyretires]

A generation is about 20 years. A generation is a cohort that has had similar experiences over the course of their lives

[@vcuheel1464]

Being wealthy and feeling wealthy are two different things.

[@AmyGimsby]

I am worried I won’t have enough saved for retirement, it’s a constant stress.

[@lewiskent5684]

Wealthy is not the best term to use because it has different meanings for different people. Personally, I would prefer data on the amount people believe they need to achieve financial independence. I’m interested to understand by age group, the amount of financial assets they believe they need to support their minimum desired standard of living for the rest of their lives.

[@zackdreamcast]

2.5M in household net worth… and I don’t feel wealthy. Currently 42yrs old. wife 40. 2 kids under 8.

[@MacD2029]

That's not wealthy by any stretch. It is a good position to be in though.

[@dannynone2784]

What percentage of that 2.5M is liquid vs real estate and retirement money?

[@lewiskent5684]

$3.5M in household net worth. $2.8M in liquid assets. We are definitely not financially independent. $800K in mortgage debt 30Y fixed at 3.6%. In early 50’s with a 16 year old and a 13 year old at home. Probably need about $6M to achieve financial independence at our current level of expenses. We would love to retire early, but college expenses will likely keep us in the rat race until mid-60’s unfortunately.

[@robjus1601]

⁠@@lewiskent5684 if you simply cut out some of your spending you could retire immediately. You are well ahead of more than 98 percent of all Americans. Well done.

[@ISpitHotFiyaa]

The term "wealthy" is too arbitrary and there are a lot of people that don't understand finance. To me "wealthy" is the ability to live an upper middle class lifestyle indefinitely without work. We can debate a little bit on what that is but let's say it's spending (not earning) $100k/yr. By 4% rule and making some assumptions about taxes you'd need around $3M to do that so $3M would thus be the boundary of what's considered wealthy at any age. You could also look at things from a statistical point of view at each age but even if a 22 year old has a million and is in the top 1% for his age I'd refrain from calling him wealthy because he still has to work to have anything other than a very basic lifestyle.

[@lewiskent5684]

No way would $100k/year support raising a couple of kids in our Atlanta suburb and we have great public schools. We are currently making around $300k/year and after savings, can’t afford to take a family vacation. SAT tudors, AAU fees, private lessons… I’m actually beginning to think our costs will go down when our kids go to college and we don’t even pay for private schools.

[@bootsmith8016]

@@lewiskent5684you *can* afford to take family vacations, you are just *choosing* to spend the money elsewhere. You can do almost anything, just not everything. I also would suggest that family vacations would be more valuable to your children than private schools, SAT tutors and private lessons.

[@fialee8ca132]

It's a matter of perspective. Someone who has never been wealthy shouldn't be part of the survey. It's like asking a virgin what sex feels like. They can describe something what they think it might be like... but unless you had sex, you can really accurately explain or describe it.

[@NotShowingOff]

If you have a paid for house. 500k with some average growth should be enough at mid-60s

[@jjdelamo6246]

health is wealth

[@UNDERDOG18UNDERDOG18]

Health is health. Wealth is wealth. Health can aid in enjoying wealth, but it’s not wealth in itself. Been poor and extremely healthy before - no good. Now wealthy and healthy.

[@user-tb7rc1uj5u]

💯 😊

[@headlibrarian1996]

The notion that couple with pensions having a capitalized value well north of a million dollars has no assets is a gross distortion. You often see this used to imply that, for example, a pair of retired government employees with $3 million in combined pensions (measured as if these were private annuities) have less wealth than a private sector couple with $2 million in 401ks. This kind of categorical error infects far too many net worth studies.

[@meibing4912]

Cash flow is hugely underrated in retirement planning. The idea of retiring dept free is a fundamental misunderstanding. Lots of people can do much, much better letting their mortage run and keeping the money in their own hands instead of giving it to their bank. People almost never have financial issues due to lack of income - its lack of liquidity that wreaks havoc in people’s lives. Remember you can only borrow money if you have money!

[@M22Research]

$692K Baby Boomer vs $560K overall… that’s “not significantly different”? For most folks if their net worth or wealth rose by 25%, they’d consider that petty “significant”!

[@robm6803]

+25% takes on average about 3-4 years in the stock market. So yes, it is not that big of a difference.

[@Lolatyou332]

I feel wealthy even though my net worth is only about 300k.. But I'm also just 31 so it's more an age related thing rather than the actual number.

[@NashvILLe05]

My net worth was 1/10 of yours at the same age. Ten years later, it’s 2.0MM. You’re doing great! Keep plugging away. 😊

[@Reload77725]

LOL, you're not even close to being wealthy. You'll need AT LEAST $50M net worth to feel wealthy and even then, you're NOT rich.

[@jameswitte5676]

👍👍

[@miked5357]

I'm officially broke!

[@mmaranta785]

Do you count your house value in net worth?

[@kathyt2108]

Yes, but you only count it in your retirement plan if you are going to sell someday. Otherwise it’s like the diamond example.

[@kennethtaylor1588]

​@@kathyt2108That's bad advice. Plenty of people leverage their equity and use their home as part of other financial activity

[@kbmblizz1940]

No, $500k in the USA is not wealthy. E.g. everyone of my friends thinks he is an above average driver. 😅 High net worth allows options lower nw folks don't have.

[@notnotandrew]

How many times are you going to switch back and forth between saying “median” and “average?”

[@TheRemyRomano]

What does a good financial plan look like? All my life I hear about written plans and I’ve not seen a single one yet that is followed or even useable.

[@ystebadvonschlegel3295]

If you feel wealthy with only a 500K net worth close to retirement, you’re smoking the ganja

[@incognitotorpedo42]

Makes a big difference if your house is payed for.

[@kennethtaylor1588]

Always someone like you that let's comparison steal their joy, but plenty of smart aren't as easily duped.

[@sammencia7945]

CFP like this guy only talk about people with 1 million+. Useless to average people.

[@jjcnpa]

$1 million at age 60 or 65 isn't close to being wealthy; it's the bare minimum.

[@kennethtaylor1588]

Only because you have a very limited financial perspective and completely missed a major point of the clip

[@johnnyretires]

Silly video. I would consider myself wealthy if I had $25-30 million. And that is trailer park wealthy.

[@missgui4400]

Where do you live? Lol😅

[@ssing7113]

😂 2.2 M to feel wealthy 😂 That’s cute poor people. No it don’t make you feel wealthy one bit. What’s wealthy is the inflation adjusted 30 M Is there idea of wealth paying for your cat litter and affording rent ok? 😂 Sorry I’m just laughing as a wealthy person myself and being around wealth. . You need a lot more than you think / you have extremely low expectations for your life. You decide what side of the fence you want to be on

[@cbell5017]

Hilarious!

[@anitas5817]

Not everyone needs that much money to feel secure and happy.

[@missgui4400]

Wealth is relative. Some people feel wealthy for having a simple life and a healthy body.

[@audience2]

OK I decide I want $30 million.

[@dforrest4503]

Because wealthy people often comment condescendingly on KZbin channels.