How Much Money Does It Take To Be Wealthy?

How much money does one need to be wealthy? According to a Schwab study $2.4M to be wealthy and $1.1M to be financially comfortable according to a Schwab’s recent study entitled “How Americans Define and Manage Their Wealth“.

A financially comfortable amount of income in retirement would equate to $44K per year ($1.1M*4%=$44K) where as a wealthy amount of income in retirement would equate to $96K.

This makes sense when you reference those income amounts to the median household income in the US of $56,500 according to FRED. In another context, Schwab’s finding of wealthy compares closely to Pew’s upper middle class definition for a household of two – $96,000 vs $102,560.

The MOREs Early Retirement Number is ‘Wealthy’/Upper Middle Income

My wife and I are well above the upper income for a household of 2, making collectively around $200K. However, our early retirement goals equate to 40%-50% of that amount.  Our 10 year plan has us on track to reach ~$2,000,000 right now – just shy of the $2.4M mark. This does not consider any positive impacts to our finances (e.g., raises, unexpected windfalls/bonuses) or negative impacts (e.g., kids – which we are planning on). I hope that Mrs MORE and I can get to early retirement in at least a financially comfortable position, if not a wealthy position.

In Schwab terms, yellow is financially comfortable and green is wealthy. We fall just shy of wealthy given 10 years and expected savings rate of $8K a month (includes 401k contributions, employer matches, Roth contributions and taxable savings).

Where do you fall? I’ll figure out a way to provide a copy of this sheet so you can manipulate the assumptions.

What you can do to get ‘financially comfortable’ or ‘wealthy’?

  1. Define early retirement goals: It’s up to you whether or not you need $2.4M to feel wealthy or $1.1M to feel comfortable. Mr Money Mustache would probably describe himself as financial comfortable at a minimum and he retired with ~$600,000. What’s your number?
  2. Lengthen the amount of time: While not ideal, the longer you save the more you can save and the more time your money has to compound.
  3. Increase savings amount: Harder than lengthening the amount of time is increasing your monthly contribution. This typically requires pay raises or cutting back on expenses.

There are many other ways to get there (e.g., multiple income streams, better rates on debt, etc.) but we’ll save that for another post.

What’s your financially comfortable or wealthy number? Higher? Lower? Have you read of any other examples of people retiring early with less or more amounts and how it’s impacting their lives?