Having just gone through 40-year high inflation, the dollar doesn’t stretch as it used to.

The evidence is everywhere. Four out of 10 Americans cannot afford to buy a house, personal emergency funds are depleted, and retirement savings are dwindling.

But here’s a surprising paradox: While the nation grapples with one of the biggest cost-of-living crises, the perceived threshold for “financial security” is falling.

According to a recent report from analysts at Charles Schwab, Americans believe they need a lower net worth to feel comfortable in 2023 than they did in 2022. Here’s how that breaks down:

CityNet worth to feel financially comfortable
Atlanta$729,000 (down from $771,000 in 2022)
Boston$932,000 (up from $892,000 in 2022)
Chicago$817,000 (down from $956,000 in 2022)
Dallas$820,000 (down from $840,000 in 2022)
Denver$710,000 (down from $671,000 in 2022)
Houston$606,000 (down from $919,000 in 2022)
New York$1.2 million (down from $1.4 million in 2022)
Phoenix$653,000 (down from $747,000 in 2022)
San Francisco$1.7 million (same as 2022)
Seattle$1 million (down from $1.2 million in 2022)
Southern California$1.5 million (up from $1.3 million in 2022)
Washington, DC$1 million (down from $1.1 million in 2022)

Charles Schwab found that people need less money for financial comfort in most metropolitan places. There were only three exceptions: Boston, San Francisco, and Southern California. How so?

The “wealth paradox”

There’s one piece of information in Charles Schwab’s research that may explain this phenomenon. According to their analysis, we’re running into what researchers are calling a “wealth paradox.”

Essentially, we’re in a place where people who consider themselves wealthy make significantly less money than what they think it takes to make them “wealthy.”

According to Schwab’s survey, Americans believe it takes $2.2 million to be wealthy. But the same respondents consider themselves wealthy if their net worth is just $560,000 —only a quarter of that.

The “wealth paradox” may have to do with changing perceptions of wealth. It’s no longer simply about how many zeros you have on your bank statement.

For example, millennials consider things like health, family, and work/life balance as part of their wealth. In fact, when asked whether they were more concerned with having time or having money, 61% of respondents chose time.

That may explain why millennials in the study feel the most wealthy today (57%), while boomers feel the least wealthy (40%).

Money alone isn’t the answer to a happy life

If Schwab’s report tells us one thing, it’s that Americans’ view on wealth is changing.

And while younger generations don't carry as much wealth on paper as their parents or grandparents, they aren't necessarily worse off by their broader definition of wealth.

After all, a happy and fulfilling life isn’t about hanging out in the most upscale neighborhood or driving the most expensive car.