Most Americans dream of being rich. But how much does it take to be considered wealthy? A net worth of $2.5 million is what Americans think it takes to earn the wealthy moniker, according to Charles Schwab’s annual Modern Wealth survey.

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That seven-figure sum is up 14% from a year ago, when survey respondents thought amassing $2.2 million was enough.

The good news: You don’t have to be wealthy to fund a good lifestyle and stay out of financial trouble. Americans say the average net worth required to be “financially comfortable” is $778,000, according to the Charles Schwab (SCHW) survey.

Breaking Down What’s “Wealthy”

When it comes to being wealthy, Baby Boomers think it takes a net worth of $2.8 million. Gen Xers say $2.7 million. Millennials think it takes $2.2 million to be wealthy. And the Gen Z generation comes in low at $1.2 million.

Where you live can skew the numbers, too. People who live in expensive locales like San Francisco and New York City say it takes $4.4 million and $2.9 million, respectively, to be considered wealthy. Whereas the magic number dips to $2.3 million for Americans living in Phoenix and $2.2 million for folks living in Dallas.

Only 21% of Americans responding to Schwab’s survey think they will be wealthy within their lifetimes.

These numbers, of course, are just guesses. Still, getting a ballpark number of how big an account balance is needed to reach one’s financial goals has its benefits, says Rob Williams, managing director of financial planning at Charles Schwab.

“When you pull numbers out of thin air, it’s kind of an abstract concept,” said Williams. “A lot of Americans say, I want to be a millionaire. Well, let’s connect that to the reality of the financial plan, the investments you’re making. Let’s put some discipline around that and take ownership of the steps required to achieve those goals.”

What’s more, everybody’s magic number to feel wealthy or financially comfortable is different. And not having to worry about money isn’t a guarantee even for folks with a lot of money socked away, says Jason Grover, founder and financial planning specialist at Grover Financial Services in Pittsford, N.Y.

“It comes down to not how much money you have, but how much you spend,” said Grover. “I have clients that can retire comfortably with $200,000 in savings because they have pensions, they’ve saved well and they’re not spendthrifts. And there are people with $2.5 million dollars that can’t fathom retiring because of their lifestyle.”

There are many sources of wealth. Cash in the bank is only part of it. There’s also the value of stocks, bonds, mutual funds and ETFs. Home equity is key, too, as are 401(k) and IRA account balances. Even the antique painting hanging in the living room, the cars and boats parked in the garage and cryptocurrencies count as wealth.

And wealth means different things to different people, says Williams. For some people, wealth means financial freedom. For others wealth is all about dollars and what they can buy. Some view the upside of wealth in the financial confidence it conveys.

So, what are the building blocks to generate enough money to join the ranks of the wealthy?

Commit To Saving

Saving and investing sounds easy. “But not everyone does that,” said Williams.

It’s about the basics. Start saving early to allow your money to grow and benefit from compounding. “Compound interest can really be a springboard towards building wealth,” said Grover.

It’s vital that you also invest in your 401(k) at work or set up an individual retirement account (IRA). And diversify your investments in a broad basket of stocks in a fund or ETF that tracks a broad equity index like the S&P 500.

Grow Your Portfolio

Invest in stocks and growth-oriented assets to keep expanding your wealth. Investing is different from saving. You can’t grow wealth stashing your cash under the mattress and earning 0% interest. You must invest for growth. That means owning stocks.

“Investing is an act of optimism, an act of ownership in the U.S. economy,” said Williams. “And the most upside comes from owning equities. (Historically), stocks have been the most powerful wealth-building tool.”

Profit From Your 401(k)

Employer-sponsored retirement accounts are the road to a secure retirement. With traditional pensions virtually extinct, having money deducted from your paycheck and contributing to your 401(k) is a key step to building wealth and a secure retirement.

“Get the most out of your 401(k),” said Grover. That means contributing enough of your own money to take advantage of your company’s match. And make sure you are investing in growth-oriented assets like stocks, as well as fixed-income assets like bonds. Your risk tolerance and time horizon before retirement should match.

A big plus today is new employees don’t have to do anything to start saving. A growing number or 401(k) plans sign you up on day one with automatic enrollment. “More companies are forcing their employees to save right away, unless they opt out,” said Grover. “That’s a huge benefit to the average person saving for retirement.”

And starting next year, thanks to the Secure Act 2.0, employers will be required to automatically enroll eligible new employees in the 401(k) plan.

Investing in a Roth 401(k), which is funded with already taxed dollars but comes with tax-free withdrawals, is a good option for younger workers. They are in lower tax brackets early in their careers.

Build Equity Via Homeownership

A house is a place to call home. But it’s also a place to build wealth, says Williams. Every mortgage payment pays off a part of the loan and builds home equity.

Homes, like stocks and other assets, can also rise in value over time. In the second quarter of 2024, 89% of homes in measured metro areas registered price gains, according to the National Association of Realtors. The national median single-family home price at the end of June was $422,100, up 4.9% from a year ago.

Put A Financial Plan In Place

You can’t get to where you are going unless you map out a plan to get there.

Just 18% of Americans responding to Schwab’s survey said, “I’m on top of my finances now.” So, reaching out to a financial advisor for help is something savers might think about.

Don’t live and spend just for today, says Williams. It’s important to acknowledge that you have future financial goals. “A financial plan is a living, breathing, ongoing road map” for your financial future, said Williams. Setting up a financial plan “helps you take action.”

And barring an unforeseen life change, such as death, divorce, the birth of a child and other curveballs life throws you, stick to your plan, adds Grover.

“What we do have control over is how much we spend, save and invest. And the financial plan is crucial to helping us manage our emotions,” Grover said. “That’s what a financial plan is really about: protecting ourselves from ourselves.”

Not everyone can accumulate $2.5 million and be deemed wealthy. But most people who are regular savers can come up with the $778,000 Americans feel they need to be financially comfortable, Williams says.

“That may look like a large number, but it’s achievable with relatively simple, straightforward discipline savings steps,” said Williams.

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