COVID-19 Changes American Perspective on Wealth and Finances

Financial stress is on the rise but Americans exhibit positive financial behaviors during a difficult period

SAN FRANCISCO--()--According to Charles Schwab’s 2020 Modern Wealth Survey, an annual examination of perspectives on saving, spending, investing and wealth, 57 percent of Americans say that they or a close family member have been financially impacted by COVID-19, but at the same time, there are some silver linings when it comes to people’s financial behaviors. Thirty-six percent of Americans say they are more likely to have savings to cover emergency expenses, and 40 percent say they are more likely to be saving more in general compared to before the pandemic outbreak in the U.S. Twenty-four percent say they are now more likely to have a financial plan, and while around 30 percent of those surveyed express some apprehension about investing, roughly one in five say they are more likely to invest more in the stock market (19%) or start investing (22%) during this time.

Americans also report that their relationships drive their overall happiness more than twice as much as money, but they are concerned about their financial futures, with only one quarter feeling highly confident about reaching their financial goals – down from one-third when surveyed in January 2020.

Schwab’s 2020 Modern Wealth Survey is comprised of data gathered from 1,000 respondents in January 2020 before the widespread COVID-19 outbreak in the U.S., and again in June 2020.

“The pandemic and the uncertainty it’s causing are changing how people think about their wealth and planning for the future, but we’re seeing a very productive investor reaction in many ways,” says Jonathan Craig, senior executive vice president, Schwab Investor Services. “In both our survey results and the client behavior we’ve observed since March, we’re seeing a high percentage of people engage with their money and investments, and in many cases seek more help and guidance to make sure they’re on the right track.”

COVID-19 recalibrates American financial aspirations: less is more

Americans have begun to think differently about the value of their money, and their comfort level is changing. When asked what it takes to be financially comfortable now, Americans say it takes much less than it did in January – respondents cited an average of $655,000 in net worth when surveyed in June 2020, down nearly 30 percent from January 2020 when their comfort level stood at an average of $934,000. The bar for the level of assets that Americans think it takes to be considered wealthy has been lowered as well. Today they feel that an average of $2.0 million in net worth equates to wealth, down 23 percent from a loftier average of $2.6 million in January.

 

Net worth to be comfortable

Net worth to be wealthy

Prior to widespread U.S. COVID-19 outbreak (January 2020)

$934,000

$2.6 million

Today (June 2020)

$655,000

$2.0 million

Financial stress is on the rise, especially among Millennials

In the midst of the COVID-19 pandemic, 30 percent of survey respondents say they or a family member have experienced a salary cut or reduced work hours, and 25 percent say either they or a family member have been furloughed or laid off. When it comes to impacts on salary and work hours, Millennials are the most affected of all generations, with 41 percent stating that they or a family member have experienced one of these issues.

When asked about their level of financial stress (on a scale of 0 to 100), Americans say they are nearly 15 percent more financially stressed today compared to the end of 2019 before the widespread COVID-19 outbreak in the U.S. Americans also indicate that their increasing stress levels might have a lasting effect. When asked to predict their level of financial stress once the pandemic subsides, they anticipate they will still be more financially stressed than prior to the outbreak of COVID-19.

Millennials are the most financially stressed generation at each point in time surveyed, while Baby Boomers are the least financially stressed.

Time

Financial stress score
across generations (of 100)

Prior to widespread U.S. COVID-19 outbreak
(end of 2019)

45.9

Today

52.5

After the threat of COVID-19 has subsided (predicted)

49.2

Relationships and health remain the biggest drivers of overall happiness

Americans’ attitudes about money play a role in their overall happiness, but when asked about the most important factor to their overall happiness today, Americans say relationships are number one, followed by health and money – the same order as before the pandemic outbreak.

Top Drivers of Overall Happiness

Relationships

39%

Health

27%

Money

17%

Lifestyle

14%

Career

3%

About the Survey

Both waves of the online survey were conducted by Logica Research, among 1,000 Americans aged 21 to 75. The January wave was conducted from January 9th to January 16th, 2020 and the June wave was conducted between June 25th and July 2nd, 2020. Quotas were set so that the sample is as demographically representative as possible for each wave. The margin of error for the total survey sample is three percentage points.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Disclosures:

Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 360 offices and 14.1 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.5 million banking accounts, and $4.11 trillion in client assets as of June 30, 2020. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.aboutschwab.com.

(0720-0RVC)

Contacts

Marianne Ahlmann
Charles Schwab
415-667-1115
marianne.ahlmann@schwab.com

Release Summary

According to Schwab’s 2020 Modern Wealth Survey, 57% of Americans say that they or a close family member have been financially impacted by COVID-19.

Contacts

Marianne Ahlmann
Charles Schwab
415-667-1115
marianne.ahlmann@schwab.com