A few decades ago, you'd made it if you hit that magic million-dollar mark. You were rich. These days, though, with skyrocketing costs and social media awash with luxury-laden highlights, it can feel like everyone's got a cool million in their back pocket. The truth? That's more illusion than reality. As financial guru Dave Ramsey put it: "8 out of 10 people probably can't afford the home they're living in and the car they're driving."
Don't Miss:
- CD Popularity Soars: Over 50 Million Americans Embrace Safe Savings with 5–10% Annual Growth
- Many are using this retirement income calculator to check if they’re on pace — here’s a breakdown on how on what’s behind this formula.
Social media tends to amplify what looks like wealth, leading to this widespread perception that everyone's swimming in money. But peek behind the scenes and it's clear that not as many people are flush with cash as it seems. So, let's break it down – how many Americans have a net worth of $1 million or more?
Spoiler Alert: It's Not As Many As You'd Think
According to the 2022 Survey of Consumer Finances by the Federal Reserve, only about 12% of U.S. households have a net worth over $1 million. This means that the vast majority – 88% – are nowhere near that level. Keep in mind that this is "household" net worth, which likely assumes a two-person income and combined assets.
Wealth is highly concentrated and while the average U.S. household net worth is $1.06 million, the median net worth is much lower, at $192,700. Translation: A few very wealthy households are driving up the average but most people are much closer to that median number.
Where Are the Millionaires?
Certain states and age groups stand out for context. New Jersey, for instance, has the highest rate of millionaire households – about 9.76% of homes there have a net worth over $1 million. Age-wise, those between 65 and 74 have the highest average net worth at $1.2 million but the median for that same group is just $266,400. In other words, while some retirees have saved a bundle, many are just getting by.
401(k) balances tell a similar story. The average 401(k) balance for Americans aged 65 and older is $272,588 but the median is just $88,488 – meaning half of people have less than that amount saved.
What Does It Mean to Have $1 Million?
A net worth of $1 million isn't the same as having that amount sitting in the bank. Net worth includes assets like home equity, investments and retirement accounts – things that aren't easily converted to cash. And with inflation driving up living costs, many Americans now consider $2.2 million the new minimum to feel "wealthy."
See Also: Studies show 50% of consumers think Financial Advisors cost much more than they do — to debunk this, this company provides matching for free and a complimentary first call with the matched advisor.
Are We All Millionaires Yet?
The short answer is no, not even close. And while social media may make it seem like everyone else is living in luxury, the reality is far more modest. In fact, most people are still trying to build their financial safety nets, making those few million-dollar net worthy seem rare and impressive.
Next time you scroll through someone's highlight reel, remember: what you see is just that – a highlight.
If you’re looking to hit that million-dollar mark yourself, it's less about flash and more about patience and steady saving. Say you're 35 and you've got $20,000 already saved. Assuming an average annual return of 7% – a common benchmark for long-term investments – you'd need to save around $5,000 a year or about $417 a month to reach $1 million by age 65. If you increase that amount as your income grows, you'll reach your goal even sooner. The key is consistency, letting time and compounding work their magic.
Of course, this is just one scenario and everyone's situation differs. The best way to map out your path is by talking to a financial advisor. They can help you customize a strategy that fits your income, goals and lifestyle, whether you're aiming for that million or a secure retirement.
Read Next:
- The average American couple has saved this much money for retirement — How do you compare?
- Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
