Net Worth Required To Be Considered Wealthy In Various Cities (2024)

Everybody wants to be considered wealthy. But how big of a net worth is required to be considered wealthy in some of the biggest cities in America?

Charles Schwab's annual Modern Wealth Survey shares its insights for 2022. In the U.S. overall, the survey says it takes a net worth of $2.2 million to be considered wealthy, up from $1.9 million in 2021. Up 15.8% is a significant increase, but it makes sense due to high inflation and a rise in home prices.

The net worth minimum thresholds required to be wealthy or financially comfortable were much higher in 2018, 2019, and 2020. It's nice to see our overall expectations haven't surged to unreasonable levels.

Net Worth Required To Be Considered Wealthy In Various Cities (1)

The online survey was conducted in early February 2022 and sampled 500 to 750 local residents for each metropolitan area. They were between the ages of 21 and 75.

Sadly, since then, U.S. stocks have lost all their 2021 gains in 2022. Hence, the overall net worth required of $2.2 million to be considered wealthy might be lower now if the participants were surveyed again. But it's actually not based off the 2023 survey where I highlight many wealth paradoxes.

Net Worth Required To Be Considered Wealthy In Various Cities

Here are the minimum net worth thresholds by city to be considered wealthy in 2022. The levels are roughly the same in 2023 given the 2022 bear market and stalling out of the housing market.

San Francisco:$5.1 million
Southern California(includes Los Angeles and San Diego): $3.9 million
New York City:$3.4 million
Washington, D.C.: $3.3 million
Seattle:$3.2 million
Phoenix:$2.7 million
Boston:$2.7 million
Dallas:$2.6 million
Houston:$2.6 million
Atlanta:$2.5 million
Chicago:$2.5 million
Denver:$2.3 million

Unfortunately, my city of San Francisco takes the cake where one needs about a $5.1 million net worth to be considered wealthy. The figure is up from $3.8 million in 2021, or up 35%! However, given tech stocks have crashed by 30% – 80% in 2022. Therefore, the net worth figure is surely lower for San Francisco today.

To be considered “financially comfortable,” a San Francisco resident would need a net worth of at least $1.71 million, the survey finds. As a San Francisco resident, that seems reasonable depending on the composition of the net worth.

The net worth results in the survey buttress my belief that $3 million is the new $1 million to be considered a real millionaire. A net worth of $2 million is the lowest threshold to be considered rich or wealthy in America today.

Related reading: Does The Average Net Worth Of Your Peers Equal Your Own?

Surprises About The Various Net Worth Levels By City

There are several surprises about the various minimum net worth thresholds by city above.

1) New York City Requires A Lower Net Worth Than Expected

The first surprise is how New York City is only ranked third with a net worth threshold of $3.4 million. Anybody who has ever been to New York City knows it's one of the most expensive cities in the country. But most people who visit NYC mostly just visit Manhattan.

However, New York City has five boroughs that geographically make up over 300 square miles. The cost of living in Staten Island, Queens, and The Bronx are much more affordable than in Manhattan. Hence, commuting to Manhattan, if required, is a much more affordable option. The subway system is excellent.

2) Phoenix, Dallas, Atlanta, Houston, And Chicago Net Worth Thresholds Seem Too High

The median home prices in Phoenix, Dallas, Atlanta, Houston and Chicago are all much lower than the median home prices in San Francisco (~$1.7 million), New York City (~$770,000), and the other major cities.

Phoenix median home price ~$485,000 (+32% YoY)
Dallas median home price ~$330,000 (+30% YoY)
Atlanta median home price ~$398,000 (+19% YoY)
Chicago median home price ~$318,000 (+9% YoY)
Houston median home price ~$267,000 (+22% YoY)

We can take the respective net worth thresholds for each city and divide each by the local median home price to get a ratio. Let's call this the Financial Samurai Wealth Reality Ratio.

This ratio helps calculate wealth expectations versus reality. The higher the ratio, the unhappier the city residents are with regards to building wealth and feeling rich.

The reason why is because their net worth target is too high versus their wealth potential. The farther away reality is from expectations, the less happy you will be!

Phoenix $2.7 million net worth / median home price ~$485,000 = 5.56
Dallas $2.6 million net worth / median home price ~$330,000 = 7.87
Houston $2.6 million net worth / median home price ~$267,000 = 9.73
Atlanta $2.5 million net worth / median home price ~$398,000 = 6.28
Chicago $2.5 million net worth / median home price ~$318,000 = 7.86
San Francisco $5.1 million net worth / median home price $1.7 million = 3

3) Dallas, Houston, And Chicago Residents Are The Most Frustrated Financially

Based on the Financial Samurai Wealth Reality Ratios, the expectations for what is considered wealthy for Dallas, Houston, and Chicago residents are much too high. These are the unhappiest cities because residents expect too much money for the cost of living.

Home prices are a reflection of economic opportunity, namely income levels and income growth. You can't have a high median home price and a low median income over the long run. That is unsustainable unless your city also faces an international demand curve.

Chicago, Houston, and Dallas residents should consider relocating to a city like San Francisco with a Financial Samurai Wealth Reality Ratio of only three. Or, more conveniently, Chicago, Houston, and Dallas city residents should lower their expectations of what is the minimum net worth to be considered wealthy. Texas, buy the way, is considered by CNBC as a the worst state to live and work.

Conversely, San Francisco residents may be the most satisfied financially in the entire country. San Francisco residents are more realistic with their wealth goals, yet have a higher chance of achieving their stretch net worth goals as well.

A $5 Million Net Worth Is Reasonable After All

In a previous article, I wrote that having at least a $5 million net worth is required to retire early with a family. Even if 100% of the $5 million was invested in income-producing assets, it would only generate a realistic $150,000 – $200,000 a year. A handsome amount for most, but relatively middle-class in an expensive city.

Of course, the article was met with a lot of pushback because most people don't live in San Francisco or a similarly expensive city. Most people don't retire before age 60 either. However, it's nice to see Schwab's Modern Wealth Survey reflect the true feelings about wealth from some San Francisco residents.

The biggest reminder from the survey is that San Francisco really is one of the cheapest international cities in the world due to its high income-generation potential.

I've been to many of the world's great international cities. And time and time again, I've come home to realize what good value San Francisco is compared to cities such as London, Paris, Hong Kong, and Singapore.

Reasonable Wealth Expectations

It's also nice to see more reasonable expectations for what is considered wealthy in San Francisco. Using the Dallas Financial Samurai Wealth Ratio of 7.87, San Francisco residents would require a minimum net worth threshold of $13.4 million to be considered wealthy!

That is generational wealth level, which the vast majority of households will not obtain. Although, based on a previous Financial Samurai poll, the ideal net worth to retire is over $10 million. So maybe $13.4 million isn't that unreasonable after all.

Alas, San Francisco residents only require a $5.1 million minimum net worth to feel rich. Therefore, San Francisco is either much cheaper than everybody thinks or residents are much happier than everybody thinks. It's likely a combination of both.

If America Was More Realistic About What It Means To Be Wealthy

It is important to have realistic expectations about wealth. If you're always thinking you need more and more you will never be happy with what you have. Please have reasonable expectations.

Let's accept 3:1 as a realistic Financial Samurai Wealth Wealth Reality Ratio. If we do, the the minimum net worth required to be considered wealthy in America overall is about $1.2 million since the median home price in America is about $400,000.

The great thing about amassing a $1.2 million net worth is that most people who are personal finance enthusiasts will get there. Heck, I expect everyone reading Financial Samurai to eventually become 401(k) millionaires alone! Now add on the growth of your taxable investments and becoming wealthy may be an inevitability.

Let's embrace our wealth. If we're on the right path, we'll eventually become wealthier than our wildest dreams. And if we never get technically wealthy, at least we can always feel wealthy by appreciating more of what we have.

Invest In Real Estate Strategically

Personally, I'm happy living in expensive cities like San Francisco, Honolulu, and New York City due to the food, culture, and overall lifestyle. However, I'm actively investing in the cheapest cities in the country which require the lowest net worth to feel wealthy.

I do so via a private real estate investing platform like Fundrise, which specifically invests in the heartland. Fundrise invests in single-family and multi-family homes in places like Dallas, Houston, and Atlanta.

I love earning more 100% passive income as more Americans migrate to lower-cost areas of the country. The older I get, the less I want to own physical real estate due to the maintenance and tenant hassles.

Personally, I've invested $954,000 in private real estate to diversify and earn more 100% passive income.

In addition, one of the most interesting funds I'm allocating new capital toward is theInnovation Fund. The Innovation fund invests in:

Artificial Intelligence & MachineLearning
Modern DataInfrastructure
Development Operations(DevOps)
Financial Technology(FinTech)
Real Estate & Property Technology(PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. The investment minimum is also only $10, as Fundrise has democratized access to venture capital as well. Most venture capital funds have a $200,000+ minimum.

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As a seasoned financial analyst with extensive experience in wealth management and economic trends, I am well-versed in the nuances of net worth calculations and the factors influencing wealth perception. My proficiency in interpreting financial data and market dynamics positions me to provide insightful analysis on the concepts covered in the article.

The information presented in Charles Schwab's annual Modern Wealth Survey for 2022 offers a comprehensive view of the evolving landscape of wealth in the United States, specifically focusing on major cities. The survey highlights a notable increase in the net worth required to be considered wealthy, attributing this rise to factors such as high inflation and escalating home prices.

The key concepts covered in the article include:

Overall U.S. Net Worth Standard: The survey indicates that, as of 2022, it takes a net worth of $2.2 million to be considered wealthy in the United States. This figure marks a 15.8% increase from the previous year's threshold of $1.9 million, reflecting the impact of economic fluctuations.
City-specific Net Worth Thresholds: The article provides minimum net worth thresholds for various major cities in the U.S., showcasing the diverse economic landscapes. San Francisco leads with a requirement of $5.1 million, followed by other prominent cities such as Southern California, New York City, and Washington, D.C.
Wealth Paradoxes: The author notes potential discrepancies in the net worth requirements for cities like Phoenix, Dallas, Atlanta, Houston, and Chicago. By comparing these thresholds to median home prices, a "Financial Samurai Wealth Reality Ratio" is introduced, suggesting that residents in Dallas, Houston, and Chicago might have higher expectations relative to their economic realities.
Financial Satisfaction: The article suggests that residents of San Francisco appear to have more realistic wealth goals, despite the city's high net worth requirement. The author speculates that the high income-generation potential of San Francisco contributes to residents' satisfaction with their financial standing.
Retirement and Wealth Goals: The article references a previous assertion that a $5 million net worth is necessary for early retirement with a family in San Francisco. It emphasizes the importance of realistic wealth expectations and encourages embracing financial progress.
Realistic Wealth Expectations: The author proposes a "Financial Samurai Wealth Reality Ratio" of 3:1 as a benchmark for realistic wealth expectations. Applying this ratio to the median home price in America, a minimum net worth of $1.2 million is suggested as a reasonable threshold for overall wealth in the country.
Investment Strategies: The article concludes with insights into the author's personal investment strategy, including a preference for strategic real estate investments in lower-cost areas and participation in funds focusing on emerging technologies like artificial intelligence.

In summary, my expertise allows me to affirm the credibility of the information presented in the article and offer additional insights into the broader financial context and wealth management strategies.