Being A Millionaire Ain’t What It Used to Be
Times have changed!
AP’s Matt Sedensky, “Who wants to be a millionaire? 1 in 10 Americans already is but the status loses its luster.”
A surging number of everyday Americans now boast a seven-figure net worth once the domain of celebrities and CEOs. But as the ranks of millionaires grow fatter, the significance of the status is shifting alongside perceptions of what it takes to be truly rich.
“Millionaire used to sound like Rich Uncle Pennybags in a top hat,” says Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, a wealth management firm in El Segundo, California. “It’s no longer a backstage pass to palatial estates and caviar bumps. It’s the new mass-affluent middleweight class, financially secure but two zeros short of private-jet territory.”
Inflation, ballooning home values and a decades-long push into stock markets by average investors have lifted millions into millionairehood. A June report from Swiss bank UBS found about one-tenth of American adults are members of the seven-digit club, with 1,000 freshly minted millionaires added daily last year.
Thirty years ago, the IRS counted 1.6 million Americans with a net worth of $1 million or more. UBS — using data from the United Nations, World Bank, International Monetary Fund and central banks of countries around the globe — put the number at 23.8 million in the U.S. last year, a nearly 15-fold increase.
The expanding ranks of millionaires come as the gulf between rich and poor widens. The richest 10% of Americans hold two-thirds of household wealth, according to the Federal Reserve, averaging $8.1 million each. The bottom 50% hold 3% of wealth, with an average of just $60,000 to their names.
This isn’t exactly shocking. Inflation is a thing, after all.
Using the BLM Inflation Calculator, we see that a million in 1950 dollars would be $13.7 million today. Going back to 1970, my early childhood, it’s still $8.5 million. Even just going to the turn of the millennium, 2000,* it has almost doubled to $1.9 million.
Still, as Sedensky rightly notes, there’s a lot more than that at work.
When I was a kid, forty-odd years ago now, loved to read The Book of Lists, The Guinness Book of World Records, and the like. I recall there being something like five billionaires on the planet. Now, there are thousands. Granting that close to half a century has passed, inflation alone doesn’t account for that.
Widespread investment in the stock market is certainly part of it. The legal shift in the early 1980s, before I entered the workforce, to incentivize investment in mutual funds and the like to save for retirement, radically changed our behavior. I’ve been investing since I was a second lieutenant, way back in 1988.
I suspect most OTB regulars are millionaires if the standard is paper wealth. Very few of us likely consider ourselves “rich.”
*Yes, as a technical matter, 2000 was the last year of the previous millennium. Few think of it that way.
Unlike at the Central Bureaucracy in the 31st century, technically correct is the worst kind of correct.
Up to the 1990s Batman animated series, Bruce Wayne was a millionaire. In more recent iterations of the character, he’s a billionaire.
Inflation, though, isn’t all of one piece. Some things have increased in price far more than others. Like housing and healthcare, for instance, and higher education.
Depends where you live. In Los Angeles I’m well off. In Las Vegas I’m quite well off. In Guatemala I’m rich. In Malibu Colony I’m the old guy walking down the beach with a metal detector.
This reminds me of something I read recently…
Three nuns get on a bus.
What’s the median income on the bus?
Bill Gates gets on the bus with the nuns.
What’s the median income now?
The times changed a minute ago.
Old school millionaire is now billionaire.
@becca: Assume, for simplicity, that the nuns have zero income. With three nuns on the bus, the median is zero. With Mr. Gates added, the median is still zero. When Bill gets on, though, the mean increases dramatically.
Okay, looking at the numbers for the last 40 years…
The CPI inflation factor for June 1985 to June 2025 is 3.00.
But the SSA’s indexing factor for wages for 1985 (to present) is 3.96.
This appears to indicate that wages have risen faster than inflation, and therefore the average standard of living has increased in the last 40 years.
There’s a similar, but lesser, difference between the inflation and indexing factors for the last 20 years.
It’s hard to grasp the total picture. Yes, there are more millionaires. No, that doesn’t mean what it used to, but yes, it’s still better than many, many Americans are doing.
And, consider the fact that it could all be wiped away by a hospital bill. This one was covered, but yeah a 60+ day hospitalization for covid cost an excess of $3 million.
It’s hard to feel anything but unnerved when you read something like that.
Ditto on depends on how you look at it and where you live, or define it as well. In 1999 if you bought a house for 240k, probably a nice house back then, that same 240k would be worth 464k today, but I guarantee that 240k house is likely worth 800k+ depending on where you live. Now you have a 800k house, but have to pay for other things that have far outpaced dollar purchasing power inflation, such as kids college, Healthcare, ya know, the things you need…those major living expenses have outpaced inflation for years and continue to do so. So you could be a millionaire on paper, but just one long term care emergency away from being broke. Question really should be, if you are a on the books millionaire in the greatest country on earth, why are you still at risk? Net worth of $10MM today is probably more in line with our past perception of millionaire
@Michael Reynolds:
That would be me too if I resided in the town of Palm Beach.
Here in Central Palm Beach County, I’m living nicely with Dear Wife. Of my condo neighbors, only two people know I’m an author. Our former HOA President and Maria who is also an author. My work or how well I have done at it doesn’t show. Who’d think a man wearing Target clothes and driving a 2005 Toyota Matrix earned over seven figures last year. Other than monthly credit card purchases, we have no debt.
Compare today to me and DW filing bankruptcy in Dec 2013 or the years 2009 to 13 when we were frequently dependent on financial help from parishioners to pay medical bills, buy groceries, or pay our electric bill all due to my battle with cancer.
Life has been great. Life has been awful. I’m alive most importantly.
The median house price in Australia is $A905,076 and steadily going up. Soon there will be millionaires everywhere. And in truth, millions of Australians have much more money today for discretionary spending than was the case last century. Doesn’t stop them whingeing about how much things cost, of course.
@Jen:
When I was teaching bankruptcy practice to aspiring paralegals, many of them were brought in from collections companies. Nearly all of them were convinced that the primary reason for bankruptcy was feckless or reckless consumer spending. People were astounded to discover that over 80% of consumer bankruptcy was driven by medical bills (that was 20 years ago). The numbers haven’t changed significantly since then.
ETA my cancer treatment (2011-15 was approximately $6.5 US. Of that, I was on the hook for 20%. That took nearly 7 years for us to pay off that balance.
As @Cracker is fond of noting, America has the finest legal and medical systems that money can buy.
@Eusebio:
Correct. Quality of life has probably increased even more, due to the general trend of improving amenities for a given (real) price.
Of course, the increase has not been evenly distributed — although (surprisingly) over the past 25 years or so the real wage increase of the bottom 50% has been slightly higher than that of the top 50%. (Keep in mind that genuine wealth doesn’t show up in wages — Elon Musk and Warren Buffet don’t earn $500M-dollar salaries, but their wealth increases by that much each year.)
The economy was working better than ever before Trump convinced Idiot America that (1) it was broken, and (2) he was the right tool to fix it. Tool, indeed.