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.
California, Texas, and New
York hold 25% of the nation’s millionaires.
The states with the most
millionaire households per capita are:
1) Maryland (7.7% of households there!)
2) New Jersey
3) Connecticut
4) Hawaii
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.
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.
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.
