For many of us growing up in the 1970s and 80s, it was held as the ultimate measure of material success: millionaire status. In our minds, to accrue one million dollars meant we would live in a gigantic 2,400 square foot mansion, drive a Porsche 911 with our salmon colored collars turned up, and probably get interviewed by Robin Leach on the sun deck of our yacht for “Lifestyles of the Rich and Famous.”
Decades later, we’ve had plenty of television shows, songs, books, and yes, even real estate seminars that celebrate membership into the vaunted millionaire club. And while a million dollars isn’t what it used to be (adjusted for inflation, $2,848,567 is equal to $1,000,000 in 1980,) it’s still an enviable chunk of change. So let’s take a look at who exactly these millionaires are, how they got there, and if our perceptions still stand true.
Although estimates vary, the most recent assessment is that there are about 6.15 million millionaire households now in the U.S. It’s important to note that those figures include retirement plans and insurance with cash value, but don’t count the value of real estate because the volatile nature of equity.
There are 114,235,996 households in the United States, so 1 in every 20 households in the U.S. has more than $1 million in assets. While that may seem like a lot, remember that we’re talking about households, which most likely contain more than one person, not individuals.
1 out of every 39,015 households has $100 million or more, while
1 out of every 314,700 households has $1 billion or more.
There are approximately 12.6 million households in the world that have a net worth exceeding $1,000,000, so almost half of them are in the United States.
Of the 6.15 million millionaires in this country, only 304,118 actually earn one million dollars per year or more.
The states with the most millionaire households per capita are:
1) Maryland (7.7% of households there!)
2) New Jersey
California is 6th on that list, with 777,624 households with at least $1 million in assets in 2013.
Statistically, the average millionaire is a fifty-seven-year-old male who is married and has three children.
Almost all millionaires are married, the vast majority of them to their first and only spouse.
Millionaires in the U.S. have an average household net worth of $3.7 million.
The median annual household income for millionaires is $131,000. Of course that is just the median, or the exact 50th percentile. The average household income is $247,000.
8% of millionaires make between $500,000 to $999,999 in income every year, while only 5% earn more than $1 million.
On average, their total annual realized income is less than 7 percent of their wealth. That means they aren’t getting rich on their income for the most part.
The median net worth in millionaire households is $1.6 million but the average is higher, with nearly 6 percent enjoying a net worth of over $10 million.
97 percent of all millionaires are homeowners.
Their average home is currently valued at $320,000 and they’ve lived in the same house for more than twenty years. (That speaks to the fact that most millionaires don’t live as lavishly as we might expect.)
Approximately 70 percent of millionaires earn 80 percent or more of their household’s income, making one person (the vast majority are men) the primary bread earner.
About half of their wives do not work outside the home. When they do work, the most frequent occupation is teaching.
Two-thirds of millionaires who are still working are self-employed. In contrast, self-employed people make up less than 20 percent of American workers.
Three out of four of millionaires who are self-employed call themselves entrepreneurs, while the rest are usually professionals like doctors, lawyers, and accountants, etc.
Most millionaires do not work in glamorous industries like pro sports, music, and entertainment, etc. They aren’t the CEOs of companies or tech wizards. In fact, the vast majority of millionaires made their wealth in professions they describe as “dull-normal”: running service, blue collar businesses or manufacturing companies that fill an under-served and very specific niche.
They are hard workers but not necessarily workaholics, as about two-thirds of millionaires put in between forty-five and fifty-five hours per week.
80 percent of millionaires have first-generation wealthy, having self-made their fortunes, going against the common perception.
Only 19 percent of millionaires receive any income or wealth of any kind from a trust fund or an estate.
Fewer than 20 percent of them inherited 10 percent or more of their wealth, a tiny proportion. More than half of all millionaires received no inheritance at all!
About fifty percent of them never even received a dollar of college tuition from their parents or other family.
But millionaires are well educated: only about one in five are not college graduates. Eighteen percent have master's degrees, 8 percent law degrees, 6 percent medical degrees, and 6 percent Ph.D.s.
They are mostly a product of public schools, as only 17 percent of millionaires or their spouses ever attended a private elementary or private high school. But their children are in private schools, to the tune of 55 percent of them.
A majority of millionaires did not attend Ivy League schools (though they did attend those institutions at a rate much higher than the general public).
Millionaires actually live well below their means and are frugal. Only a small minority live in big newer houses or drive new or leased cars. Instead, they live in older homes they’ve had for a very long time, older cars, and wear modest or inexpensive clothing.
They live in nice family neighborhoods but are usually the wealthiest, with more than six and one-half times the level of wealth of our non-millionaire neighbors, but. But their non-millionaire neighbors outnumber them more than three to one.
They are meticulous budgeters, planners, savers, and investors, on average investing at least 20 percent of their earned income every year.
They enlist the professional help and opinions of plenty of investment professionals, but in the end, most of them end up managing their own investments to some degree.
Most millionaires have accumulated enough assets so they wouldn’t have to work for 10 years at least, and usually much longer.