San Francisco Skyline at night. (Getty Images)
SAN FRANCISCO – A new survey found Americans feel they need to make an average of almost half a million dollars a year to be considered “rich,” and here in the Bay Area, where the cost of living has historically been among the highest in the country, the threshold to feel wealthy was estimated to be hundreds of thousands of dollars higher.
The survey by financial services company Bankrate.com found that overall, Americans said they would need to earn about $483,000 on average to feel rich or achieve “financial freedom.”
“Considering the San Francisco Bay Area is one of the most expensive places to live in the U.S., it’s safe to assume that those living there would need to earn even more than that to feel rich,” Bankrate analyst Alex Gailey told KTVU.
Using the survey’s data along with U.S. census information, the San Francisco Chronicle estimated that here in the Bay Area, a household would need to earn about $700K a year to get to that point.
SEE ALSO: Student loan forgiveness: Some may qualify but need to take action by April 30
Bankrate said you can blame the region’s high cost of housing.
The company said a recent study found that the Bay Area had the largest difference between the monthly cost of renting and the monthly cost of owning among top 50 metro areas.
Figures showed the typical rent was $3,024. Compare that to $8,486, the mortgage payment on a median-priced home which included 20 percent down payment, property taxes and homeowners insurance.
“That’s roughly a 181% difference between the monthly cost of renting and the monthly cost of owning,” said Gailey.
Experts pointed to home ownership as a key pathway to building long-term wealth.
“With home prices so high and housing inventory so low in the San Francisco metro area, it makes it a lot harder for people who do want to stay in these areas for a long time to purchase a home. Many people living in those cities end up renting for longer, which means putting off building a form of long-term wealth,” Gailey said, adding, “So, unless you are making well above six figures, you can easily feel priced out of the Bay Area.”
SEE ALSO: 20 least affordable US cities are in California: study
Other key findings from the Bankrate survey showed that overall, women felt they needed a higher annual income to feel rich, at $502K, compared to men, who cited $465K as the threshold.
The survey also found that participants believed that they would need to earn $233K a year to reach “financial comfort.”
In places like San Francisco, not surprisingly, that amount was higher, Bankrate noted.
Its survey found Americans living in the West reported that they needed to earn $246K on average to feel financially secure.
And for many Americans, the idea of financial security was one that felt out of reach.
According to Bankrate, an overwhelming 72 percent said they felt financially insecure, with 26 percent sharing that they expect they’ll never be completely financially secure.