Or put another way, US$2.1m today is equivalent to what US$1m was about 30 years ago \u2013 which helps explain why there are so many more millionaires than there were a generation or two ago.<\/p>\n
Even with the rising ranks of millionaires, it\u2019s a milestone that remains frustratingly out of reach for most. Average wealth is pulled upward significantly because the top 10% hold two-thirds of total household wealth and are worth an average of US$8.1m. The bottom half of households, measured by wealth, hold just 2.5% of the total and are worth US$60,000 on average.<\/p>\n
The gap between the wealthiest Americans and everyone else has widened since the pandemic, as high-income families reap the benefits of rising home values, ballooning stock prices and outsize income gains. Lower- and middle-income Americans, by comparison, are increasingly struggling under the weight of rising costs and are falling behind on utility bills, car loans, credit card payments and even the cost of filling up at the gas station.<\/p>\n
In interviews with nearly a dozen recently minted millionaires, not a single one said they felt wealthy in today\u2019s economy. Most said they felt financially stable and prepared for an emergency \u2013 a job loss, say, or unexpected medical cost \u2013 but none said it felt like the kind of money that would allow them to live lavishly or retire early.<\/p>\n
Instead, they said they quietly marked the occasion, by going out for ice cream or booking a weekend trip, then carried on with their everyday jobs and lives. \u201cThe only thing that\u2019s different now is: I buy organic strawberries every time I go to the store,\u201d one millionaire in California said.<\/p>\n
For American millionaires, the truth of the achievement is less about cash and more about amassing assets that bump up their overall net worth. Only about 4 to 6% of millionaires\u2019 wealth is readily available as cash, according to data from the Survey of Consumer Finances.<\/p>\n
Much of the nation\u2019s household wealth sits in retirement accounts, and that share has grown dramatically. In 1989, retirement made up just 7% of millionaire wealth. By 2022, that share had more than tripled.<\/p>\n
Recent jumps in the stock market have padded Americans\u2019 retirement portfolios, creating a new crop of US millionaires. But economists stress that the financial structure of retirement has changed in the past couple of generations. Employee pensions that used to guarantee a certain amount of money every year have largely been replaced by 401(k)s and other plans that have put pressure on people to independently save and invest more of their own money for retirement. As a result, Americans are increasingly on the hook for funding their own retirements.<\/p>\n
Keith Messinger, a retired civil engineer in Lexington, Kentucky, and his wife, a former teacher, recently became millionaires after 25 years of aggressively putting money toward their retirement account. It was a bumpy road to get there, Messinger said, especially after he depleted his funds a few times to cover routine expenses.<\/p>\n
US$1 million today buys what about US$$480,000 did 30 years ago. Photo \/ 123RF<\/p>\n
\u201cI looked up at 42, and I\u2019ve got US$0 in my retirement plan,\u201d recalled Messinger, now 68. \u201cI said, \u2018Well, the million-dollar boat has sailed. That\u2019s no longer reachable.\u2019\u201d<\/p>\n
Still, he decided to invest heavily in his shares of his employee-owned company. Messinger had calculated he\u2019d end up with a net worth of US$500,000 by the time he retired. But the recent run-up in the stock market \u2013 which doubled his savings in five years \u2013 has helped him reach his original goal.<\/p>\n
Messinger retired at age 65, earlier than he wanted to, because his wife got sick. They\u2019d just bought a trailer camper with plans to travel the country when his wife became disabled and largely bedbound. Messinger has since sold the trailer.<\/p>\n
\u201cThe phrase I use is: I\u2019m comfortable,\u201d he said. \u201cI can\u2019t spend money willy-nilly, but I don\u2019t worry about the day-to-day.\u201d<\/p>\n
Even becoming a multimillionaire doesn\u2019t usually make people feel entirely secure, said Megan Gorman, managing partner at Chequers Financial Management, who works with high-net-worth clients.<\/p>\n
\u201cI work with people across the wealth spectrum,\u201d she said. \u201cEven wealthy people never feel completely at rest. There is always that concern: Am I going to be okay?\u201d<\/p>\n
A big way Americans have long used to build wealth is through home ownership: housing represents about 30% of millionaire wealth, a figure that hasn\u2019t changed all that much from 30 years ago.<\/p>\n
But building wealth through equity is tough for significant parts of the population because house prices have gone up so much. Mortgage rates have also risen dramatically since the pandemic, hovering near 7% for much of the past three years.<\/p>\n
\u201cAfter the pandemic, we\u2019ve seen a lot of affordability issues for people wanting to buy in,\u201d said Zillow chief economist Mischa Fisher. But affordability has started to improve again. \u201cGoing forward over 15 to 25 years, it\u2019s still a good way to build wealth, even if it\u2019s challenging right now.\u201d<\/p>\n
That\u2019s what happened to Los Angeles resident Steve, who spoke on the condition that he be identified only by his first name to protect his financial details. Steve and his wife bought a home for about US$167,000 in the Eagle Rock neighbourhood of Los Angeles in 1994. That house is now worth just over US$1m.<\/p>\n
A steady mortgage rate and lower property taxes helped Steve and his wife save about US$1.5m for retirement. He feels stable but not as though he\u2019s living a lavish lifestyle.<\/p>\n
\u201cI live a frugal lifestyle, but I\u2019m not concerned if I have to go out to eat and prices have risen,\u201d he said. \u201cIf I need to buy something, I know I can.\u201d<\/p>\n
As the median age of a first-time home buyer has risen, now to 40, so has the age of millionaires. Households headed by someone 65 or older now represent 42% of millionaires, up from 28% in 1989, Federal Reserve data shows.<\/p>\n
But young millionaires still exist, especially those who made it big in the expansion of the tech industry.<\/p>\n
Marvin Xu, a 27-year-old software engineer in Seattle, crossed the million-dollar threshold last year. He credits his hefty compensation package \u2013 about US$240,000 a year, including equity and benefits \u2013 and stock market investments for helping drive up his wealth. His frugal lifestyle has helped, too. Xu limits travel to local campgrounds and national parks and hardly dines out.<\/p>\n
\u201cI live by myself in a small, simple apartment; I always cook at home,\u201d he said. \u201cIn general, I don\u2019t spend a lot. And everything I don\u2019t spend, I invest.\u201d<\/p>\n
Making it to US$1m felt significant, Xu said, especially because he grew up in the early aughts hearing his father, also a software engineer, talk about how it would take an entire lifetime to save that much.<\/p>\n
\u201cIt\u2019s a really nice milestone,\u201d he said. \u201cBut of course a million dollars then isn\u2019t what it is now. I don\u2019t have the US$1m my dad was talking about all those years ago.\u201d<\/p>\n
Sign up to Herald Premium Editor\u2019s Picks<\/a>, delivered straight to your inbox every Friday. Editor-in-Chief Murray Kirkness picks the week\u2019s best features, interviews and investigations. Sign up for Herald Premium here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Or put another way, US$2.1m today is equivalent to what US$1m was about 30 years ago \u2013 which…\n","protected":false},"author":2,"featured_media":385513,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[8239,6336,192,9218,138,3013,307,6440,4522,5829,37476,130,111,139,69,8830,131,2846,684,8229],"class_list":{"0":"post-385512","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-american","9":"tag-americans","10":"tag-are","11":"tag-before","12":"tag-business","13":"tag-but","14":"tag-dont","15":"tag-ever","16":"tag-feel","17":"tag-many","18":"tag-millionaires","19":"tag-more","20":"tag-new-zealand","21":"tag-newzealand","22":"tag-nz","23":"tag-rich","24":"tag-than","25":"tag-them","26":"tag-there","27":"tag-they"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/385512","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=385512"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/385512\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/385513"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=385512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=385512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=385512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}