Amid recent market volatility, falling consumer sentiment and worries about a possible recession, a 2022 survey by Charles Schwab found Americans’ expectations of what they’d need to consider themselves or others “wealthy” are on the rise.
And despite a fair amount of scrutiny this year about how companies are ranked based on environmental, social, and governance (ESG) criteria, a plurality of U.S. investors surveyed by Charles Schwab say they want to invest in line with personal values.
Meanwhile, uncertainty may be driving Americans to save more, with Fidelity reporting retirement savings rates surged to record levels in early 2022.
Key Takeaways
- The average net worth Americans considered “wealthy” this year was $2.2 million, up from $1.9 million in 2021, according to a survey by Charles Schwab.
- Across generations, most respondents say they are looking to make changes in the next 12 months to have a more positive impact on the world, including how they invest.
- Over half or 69% said they invest in companies that align with their personal values.
- A Fidelity analysis of retirement accounts found that Americans saved at a higher rate than ever for retirement in Q1 2022, with the 401(k) saving rate reaching a record 14%.
Higher Hurdles to Wealth and Comfort in 2022
Following the onset of the COVID-19 pandemic, Americans’ estimates of what level of personal net worth it would take to be considered wealthy and financially comfortable initially went down, but are now back on the rise, according to the findings of Charles Schwab’s latest Modern Wealth Survey for 2022.
The average net worth respondents considered “wealthy” this year was $2.2 million, up from $1.9 million in 2021, though still notably below the $2.6 million reported in Schwab’s 2020 survey, taken in the early months of the year. On average, they thought it would take $774,000 to feel financially comfortable, up from $624,000 in 2021.
69% of Investors Choose Companies That Align With Their Values
The survey also found that across generations, most respondents say they are looking to make changes in the next 12 months to have a more positive impact on the world, including how they invest.
“It’s a longer-term trend, but especially after the events of the past two years, Americans are thinking a lot about how their spending, saving and investing align with their personal situations and preferences, including the issues and causes they care most about,” said Charles Schwab Investor Services & Marketing Head and Managing Direction Jonathan Craig in a release.
Over half or 69% of those surveyed said they invest in companies that align with their personal values. When asked how important they consider a company or fund’s values, 81% said it was very or somewhat important, with 91% saying they consider the reputation of a company or fund they invest in important— not that far behind performance at 96% and risk at 94%.
Retirement Saving Rates Surge to Record Levels
Despite the recent market volatility and continued economic challenges following the pandemic, a Fidelity analysis of retirement accounts for Q1 2022 found that Americans are saving at a higher rate than ever for retirement, with the tracked 401(k) saving rate reaching a record 14%.
And while average account balances declined from the prior quarter and a year ago, the number of IRA holders increased, particularly among younger women, with the number of IRA accounts held by millennial women investors increasing over 26% from last year.
Fidelity’s analysis across over 35 million IRA, 401(k), and 403(b) retirement accounts found the average IRA balance was $127,100 in Q1, a 6% decline from the previous quarter. The average 401(k) balance fell to $121,700 in Q1 2022, down 7% from Q4 2021. Both were 2% lower than they were in Q1 2021. The report noted that most savers did not make significant changes to their allocations.
Data tracking continuous savers over longer periods showed how much those savings can grow over time. For those who had saved and invested through their company's defined contribution plan for the last 15 years, the average account balance grew to $482,939, up from $64,923 in Q1 2007.
“While the market's performance does impact account balances in the near term, consistent contributions and having an appropriate asset allocation are just as important for a successful long-term retirement savings strategy,” wrote Fidelity Workplace Investing President Kevin Barry in a statement.
