Wealth Survey

On a day like this I feel wealthy, and it's not from owning one of those houses.

Eighteen years ago my work colleague, Phil, and I were musing about retirement over a beer. The question before the panel: what should our financial situation be to have a comfortable retirement? The initial bid was $1 million + a paid-up house + Social Security and Medicare coverage.

Then we thought about the traveling we would like to do, the 3-years-old-or-less cars we would like to have in our driveway, and the need for long-term care, and the bank-account objective was raised to $2 million, which is easy to do when the sun is shining and you're on your third beer. The conversation was only half-serious--after all, we weren't yet on Medicare--so we had to keep working anyway.

In the intervening years Phil retired, sold his Bay Area house, and moved to Palm Springs. Whether he hit the goals we set on that distant afternoon, I don't know, but I hope he's happy. Happiness, and its relationship to wealth, is a subject more for philosophers, psychologists, and priests than accountants, but we hone in on wealth because financial measurements are objective and easier to obtain.

In the Bay Area one needs to have $3.8 million to be "wealthy". [bold added]

Respondents to the 2021 Modern Wealth Survey from Charles Schwab said it takes an average net worth of $3.8 million to be wealthy in the Bay Area, down $700,000 from $4.5 million in 2020. If you’re just aiming for “financial happiness,” that carries a price tag of $1.8 million in 2021 compared to $2.1 million in 2020.

A mere $1.3 million is enough to make you “financially comfortable” in 2021, versus $1.5 million in 2020, according to the survey responses.

Speaking from personal experience, I can tell you that "financial happiness" was not achieved at $1.8 million (the Schwab survey amount includes one's house).

While having enough money to make ends meet is necessary, it's not a sufficent condition for happiness. For that you have to look elsewhere, maybe in Palm Springs.