Every one of us has fantasized about what we would do with a million dollars or more at some point in our lives. You could quit your job, retire early, travel the world, or settle in a beachside villa in southern France.
Or, like the CEO of ByteDance, you can retire and invest your time in books and daydreaming. You could also invest that money in your community’s future or assist those in need. There seem to be infinite options, but how many people in America are millionaires, and what do actual millionaires do for a living?
Let’s analyze the lives of millionaires and find out how they earned their millions.
What Makes a Millionaire?`
A person with a $1 million net worth or more is considered a millionaire. The value of your possessions less the money you owe in debts is your net worth. It is a measure of your financial well-being.
For illustration, consider the following. Robert works as a software developer and is 45 years old. He has a mortgage of $150,000 on a property that is worth $450,000. He has a paid-off automobile that’s worth about $10,000. His 401(k) is now worth $400,000 since he has contributed the maximum amount since he began working.
In addition, he owns $190,000 in shares he received when his firm went public. Also, he received a stock and bond portfolio worth $200,000 from his parents’ estate.
When you add everything up, Robert has total assets worth $1,250,000. Robert’s net worth is $1,100,000 after we deduct his mortgage of $150,000. Robert is a millionaire.
As opposed to that, let’s consider Elaine. She has a $600,000 mortgage on a $750,000 property. She has an additional $100,000 in assets and her $400,000 401(k). It’s the same story for her as for Robert: $1,250,000 in assets. But the difference is the $600,000 in a mortgage. Therefore, Elaine is not a millionaire since her wealth is just $650,000.
The Number of U.S. Millionaires in 2023
According to the current Global Wealth Report, there are 24,480,000 millionaires in the United States in 2023. This number went up a lot because of the historic international COVID-19 pandemic, which caused stock prices and home sales to increase.
How to Become a Millionaire
Although the number of people who achieve “millionaire ” status is likely far greater than you imagine, this does not make achieving it any less challenging. Although it’s not impossible, there are no assurances that you’ll end up rich. In your quest to become a millionaire, consider the following tips.
- Start early. You’ll be better off financially if you develop the practice of saving money regularly as soon as possible. Start today.
- Live below your means. You need to make room in your spending plan for savings. Avoid saving whatever is “left” after paying all your expenditures. Pay yourself first.
- When you get a pay boost, put it directly into savings. Next, consider how to allocate some of the bonus money.
- Put money into your retirement plan every year. You should put away as much money as possible before taxes.
- Start a side business. A good way to increase your savings is to increase your income. Put all the money you make from side gigs or a second job into savings as soon as possible.
- Think about the larger picture before making a career move. Think about the wage and benefits package while deciding between employment. And make sure you get the best deal possible; if the firm can’t afford a higher wage, they could be willing to provide stock options instead.
- Invest. Forget about becoming a millionaire on a savings account earning 0.01% annual percentage yield (APY). Put your money where your risk tolerance is and leave it. Do not attempt to predict when the market will rise or fall, and do not sell your investments out of fear when the market falls. Let things play out.
- Choose your properties wisely. The majority of millionaires’ money is stored in their houses. You should think about your home’s resale value when determining where to purchase, and that includes thinking about the surrounding community and the town itself.
How Do Millionaires Invest Their Money?
As much as 40 percent of a millionaire’s wealth is often invested in real estate. This is partly due to the high value of real estate in the United States and the fact that it may be a good investment.
There is a large amount of money for many multi-millionaires that is locked up in their principal property. The typical California homeowner, for instance, would be 80 percent of the way to being a millionaire thanks to the state’s high housing prices (at about $800,000).
What do you think? Is a Millionaire Wealthy?
The term “millionaire” conjures up visions of extravagant riches for most of us, particularly those who aren’t billionaires. Is a millionaire, however, really wealthy?
In America, the vast majority of people disagree. Most Americans feel $2.2 million net worth is necessary to be “wealthy,” while $774,000 is what most estimate necessary to be “financially comfortable,” according to the 2022 Charles Schwab Wealth Study.
In urban cities, the bar is raised higher.
Even if you’re a millionaire, you might not have a lot of extra money, especially if you live in an expensive area. Even if you have a million dollars, you could struggle to make ends meet if the bulk of your wealth is tied to your main house and property taxes are sky-high relative to your income.
To be sure, “millionaire” is a handy phrase to characterize the financially secure, but wealth is more than simply net worth, particularly in times of rising inflation. The concept of “wealth” is relative and depends on various factors, including one’s income, level of debt, and standard of life.
Which states have the highest number of millionaires?
This study provides a breakdown of how many millionaires live in each state. That most millionaires live in California and New York is hardly a big surprise. If you don’t happen to be located in any of those areas, though, you may want to check to see whether your home state is among the top 10.
The states with the most millionaires are as follows:
- California
- New York
- Florida
- Texas
- Illinois
- Pennsylvania
- Arizona
- New Jersey
- Ohio
- Massachusetts
Don’t panic if your state isn’t in the top 10. Although it may be true that fewer millionaires live in your state than in others, it doesn’t imply you can’t join their ranks. Your state’s smaller population may be one reason why it has fewer millionaires than others.
Final Thoughts: Millionaires Aren’t Rare
It’s easy to imagine that the only places where millionaires live are in large, gated houses in exclusive communities with wrought-iron fences. Yet, there are more of them than you may realize, and some may even be living in your own neighborhood.
It requires hard work and effort to reach millionaire status. You can become a millionaire if you get a head start, make a strategy, and stick to it.
FAQs
Does the value of a home contribute to a person’s net worth?
What you possess minus what you owe is your net worth. Your net worth comprises of the amount of money or other valuables you have (like your house), minus any debts you owe.
Can a 401(k) plan be included in one’s net worth?
Yes. Include the value of your 401(k) in your total net worth. The total money in your 401(k) or other retirement plan is an asset, just like any other valuable possession, you may have.
How old is the average millionaire?
On average, one of the world’s 100 wealthiest people earned their first million dollars when they were 37. The median age of a millionaire is 57.
Does a millionaire belong to the wealthiest 1% of Americans?
Even if your net worth is $1 million, you won’t even be in the top 1% of Americans. You’ll need a $11.1 million net worth to join the top one percent of wealthiest Americans.
How many millionaires inherited their money?
Around 21% of millionaires owe at least part of their wealth to an inheritance, while just 3% got an inheritance worth $1 million or more. Around 89% of self-made millionaires had no family members leave them a fortune. Eight out of ten people who become millionaires came from modest means.
Do millionaires get rich through their income?
Most multimillionaires did not get there due to salary increases to seven figures. In fact, according to a survey by Ramsey Solutions, 93% of millionaires say they did not get rich because of their pay, but rather because they worked hard and stayed out of debt. Only 31% of those polled now or formerly earned more than $100,000 annually. One-third of workers in the United States never earned more than $100,000 annually.
How many millionaires have cash on hand?
The percentage of millionaires who can access their money quickly is low, at only 27%. This makes a lot of sense, since millionaires spread their money and possessions over a wide range of assets, such as mutual funds, stocks, real estate, and retirement accounts.
How many homes does the typical American millionaire own?
Despite popular belief, most millionaires in the United States would rather own only one home (43%), while just 8.5% of millionaires in the country own four or more houses.
Is the United States home to the most millionaires?
According to the Credit Suisse Institute, America has the biggest concentration of millionaires per capita of any nation in the world, with approximately 30 million millionaires while 17 million persons with $5 million net worth. To put these figures in perspective, consider that there are around 17 million millionaires in total between Japan, China, Germany, France, the United Kingdom, and Australia.
How much money does the typical American have saved?
How much money does the typical family put away each year? According to the most recent SCF data, the mean bank account balance is $41,600, much greater than the median $5,300.
How much money does the typical retiree have stashed away?
In 2023, the U.S. Census Bureau said that the median annual income for people 65 and older was $47,620. In retirement, the average annual income is $75,254.