THE COLORADO ESSENTIAL
WEALTH METRIC
A NEW BENCHMARK FOR FINANCIAL SECURITY AND PROSPERITY
When asked what is essential to their American Dream, most Americans name freedom of choice, a good family life, a comfortable retirement, and a home of their own.
All of these aspirations require wealth to achieve. Owning a home requires a down payment and the ability to sustain it. Retiring comfortably requires accumulated savings and assets. The freedom to make choices — to change jobs, to move closer to loved ones, to handle a medical bill, to invest in a child’s education — requires financial security that income alone cannot provide.
In short, wealth is not just for the wealthy. It is necessary for everyone, and essential at every age.
How Much Is Essential Wealth in Colorado?
The Colorado Essential Wealth Metric is a first-of-its-kind measure of how much wealth a household actually needs and where every Colorado family stands on the path to reaching it.
To achieve common financial goals and aspirations, households need a level of wealth that enables financial resilience, prosperity and well-being. The Colorado Essential Wealth Metric accounts for and measures all three of these complementary functions, and takes into account how wealth needs vary across life stages and geographies.
$56,000
10% of median home sales price plus 6 weeks of liquid savings. Equivalent to a downpayment’s worth of savings.
$112,000
20% of median home sales price plus 6 weeks of liquid savings. Equivalent to a downpayment’s worth of savings plus additional asset value.
$218,000
3x MIT Living Wage (annualized) in net worth plus 6 weeks liquid savings. Building a nest egg (i.e. savings or investing for a future goal like college or retirement).
$336,000
3x MIT Living Wage (annualized) in net worth plus 6 weeks liquid savings. Building a nest egg (i.e. savings or investing for a future goal like college or retirement).
$435,000
6x MIT Living Wage (annualized) in net worth plus 6 weeks liquid savings. Growing the nest egg.
$672,000
6x MIT Living Wage (annualized) in net worth plus 6 weeks liquid savings. Growing the nest egg.
$891,000
Elder Index plus 5 years and 6 weeks of liquid savings. Retirement with dignity.
$891,000
These values and their equivalences are illustrative of the amount of net worth a particular household would need. These are not the thresholds everyone at these age ranges and will vary depending on household circumstances. For example, the amounts would vary depending on if households have children or if an older couple still have a mortgage.
Colorado Family Wealth
Roughly two-thirds of Colorado households do not have the level of wealth needed to achieve financial resilience, prosperity and well-being.
While the initial finding is stark, a closer look at family wealth building across Colorado reveals that more than 50% of households have some level of savings and assets, but not yet enough to achieve essential wealth.
- 34% of Colorado households, or about 819,600, have essential wealth.
- 20%, or about 482,100 households, have emergent wealth, which includes enough savings on hand to handle a typical unexpected expense, plus enough to take a meaningful first step toward owning an appreciating asset, such as a home or retirement account.
- 32%, or about 771,600 households, are at the ground level of wealth and financial well-being. This level is called asset poverty, the amount a household needs to maintain basic financial security.
- 14%, or about 32,400 households, are below asset poverty, without a current path to building wealth.
WHY WEALTH MATTERS DURING AN AFFORDABILITY CRISIS
As Americans face an affordability crisis, income may be just enough to allow families to cover their day-to-day expenses while wealth allows them to move from surviving to thriving.
Wealth is one of the primary protectors against rising costs and one of the most reliable sources of economic stability a family can have. For example, a down payment converts an escalating rent into a fixed mortgage and a modest savings keeps a car repair or a hospital visit from becoming high-cost debt.
Wealth should no longer be the aspiration of a fortunate few. It can — and should — be attainable for every child and family because it builds resiliency, expands choice and gives people the freedom to build the lives they want for themselves and for future generations.
How To Use This Report
Addressing affordability issues and increasing wages will help Coloradans meet the demands of everyday life; however, we must also challenge the assumption that individuals must first achieve financial security before building wealth.
We believe there is potential to join forces across sectors and assemble a broad and diverse coalition committed to creating access to wealth for all Colorado families.
For philanthropy, the metric can help assess whether grantmaking and impact investing are moving families toward meaningful growth of their household balance sheets.
For policymakers, the metric informs a new wealth-building agenda, that should include down-payment assistance, baby bonds, renter shared-equity models, employee ownership incentives and retirement savings policies
For financial institutions and platforms, the metric pushes leaders to consider more than product access, but product adequacy.
For employers and business owners, the metric helps reframe compensation and retention strategies. Wages are essential, but employers can also support wealth through tools that help workers have a stake in the value they help create.
For advocates, community leaders and neighbors, the metric can help those elevating the voice of community pursue new savings and ownership goals and it should be a galvanizing new narrative: wealth isn’t just for the wealthy.
Our Work To Build Family Wealth
Contact The Gary Team
We use all of our tools – catalytic grantmaking, impact investments, policy and advocacy, and new ventures – to transform systems and build family wealth. Contact a member of our team to partner with us and use the Colorado Essential Wealth Metric in your work.
