While money is so tight for many families during the cost of living crisis, the Federal Reserve has released data appearing to declare the average American household millionaires. However, a deeper dig into the data reveals the top income percentile were those who saw the greatest income increases over the past couple of years—while the middle-income homes lagged behind.
According to the Fed’sconsumer finance surveythe mean net worth of an American household, adjusted for inflation, was $1.06 million in 2022. In comparison, in 2019 the mean net worth of an average household was $868,000, marking a 23% jump.
Mean net worth is calculated by adding up the net worths of all American households and then dividing by the number of households.
Yet when looking at the median—another measure of the average, which represents the midpoint in the ranking and is less likely to be skewed by exceptionally high or low numbers—the typical American household was worth significantly less: $192,900.
Although that figure is less exciting for aspirational workers, it still represents an impressive after-inflation gain of 37% over three years.
However, when analyzing the income of American families it becomes apparent that those in the middle of the scale are being left behind.
The top 10% of earners, who have a net worth on average of $6.63 million according to the Fed, saw their income increase by over 22%, while the middle-income percentiles—between the 20 and 59.9 mark—experienced just a 5% boost in their income between 2019 and 2022.
While the Fed notes there has been “some” increase in inequality between households, the data also shows the gap has only gotten wider between those at the extreme ends of the scale. On both gains in income and net worth, those on the lowest end of the spectrum—in the less than 20 percentile—saw far lower increases than those in the top 10%.
Take net worth, for example. Median calculations estimate those in the >20 percentile saw their wealth increase 24%, while those on the top end of the scale enjoyed a 39% gain. Mean calculations of net worth actually show a drop of 2% for the lowest end between 2019 and 2022, while the top has gains of 18%.
Booming housing market creates millionaires
The research highlights the importance of getting on the property ladder if you want to build wealth.
Nearly two out of every three American families were homeowners last year, reflecting a slight increase from the previous three years—and as the housing market boomed during the pandemic, so did the net worth of property owners.
The average net worth of homeowners stood at $1.53 million in 2022, compared with just $155,000 for renters. Even in the U.K., over 41,000 homeowners became millionaires—a rise of 6% from the year prior —as house prices skyrocketed last year.
But while the surge in home prices has benefited those already on the ladder, it creates a financial setback for aspiring homeowners. Another Fed survey released in May, found that 65% of Americans who rent are doing so because they can’t afford a down payment to buy a home.
Still, 3.5 million people lost millionaire status last year
Although the average household is getting richer, the actual number of millionaires is declining.
The number of adults with assets of more than $1 million fell from 62.9 million at the end of 2021 to 59.4 million at the end of 2022, according to the UBS’s annual wealth report—and it’s the sharpest fall since the 2008 financial crash.
Even in the U.S., where there are significantly more millionaires than anywhere else in the world, 1.8 million people lost their “millionaire status” last year. Now, the total number of millionaires in the U.S. sits at around 22.7 million.
In the U.K., the number of millionaires fell by 440,000 to 2.6 million, the third largest fall behind Japan, which dropped from 3.2 million to 2.6 million. Meanwhile, the number of individuals globally with more than $50 million fell by 22,500 to 243,000.
Correction, Oct. 25, 2023: This article’s headline was updated after publication to reflect the income of the middle class, with clarifications on inequality and middle-class income added.
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FAQs
According to the Fed's consumer finance survey the mean net worth of an American household, adjusted for inflation, was $1.06 million in 2022.
Is the average American household a millionaire? ›
According to the 2022 Federal Reserve Consumer Finance Survey, the average American household's net worth, adjusted for inflation, was $1.06 million. That's right.
Can the average American family be called millionaires? ›
It seems hard to believe, and it's one of those cases where definitions mean everything, but the average family in America has achieved millionaire status. That's according to the Federal Reserve's latest authoritative survey of consumer finances, and it comes with lots of asterisks attached.
What percentage of Americans will become millionaires? ›
While the overall odds of someone in the U.S. becoming a millionaire are about 7.29% based on the percentage of the population with that much money, you can increase your odds significantly if you just take these simple steps.
Are 8.8% of US adults millionaires? ›
Millionaires comprise about 8.8% of the American population. The average net worth of a millionaire in the U.S. is $2.2 million, according to Charles Schwab's 2022 Modern Wealth Survey.
How many people have $1,000,000 in savings? ›
But that shouldn't be the case. In fact, statistically, just 10% of Americans have saved $1 million or more for retirement. Don't feel like a failure if your nest egg isn't quite up to the seven-figure level.
What percentage of Americans have a net worth of $1000000? ›
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
What is considered wealthy in US? ›
In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.
How many households have 2 million net worth? ›
Nearly eight million families are multimillionaires, i.e., their wealth exceeds $2 million, up from 4.7 million.
What is a mini millionaire? ›
Nonetheless, not just anyone can be a mini-millionaire. Mini-millionaires, whom Zumburn describes as “upper middle class” rather than rich, typically make between $150,000 and $250,000 per year. That's more income than that of fourth fifths (78.9% to be exact) of U.S. households in 2022.
If 90% of millionaires come from real estate, then 100% of billionaires come from private equity. And every month I acquire several new companies. We've gotten into the game of mergers, acquisitions. once we figured out how to successfully build a company.
How common is being a millionaire? ›
Millionaires comprise about 8.8% of the American population. The average net worth of a millionaire in the U.S. is $2.2 million, according to Charles Schwab's 2022 Modern Wealth Survey. New Jersey boasts the highest rate of millionaires, with nearly 10% of households having a net worth of $1 million or above.
Which state has the most millionaires? ›
It's no surprise that California and New York have the most millionaires.
What is a typical millionaire profile? ›
Meet the typical millionaire: They're over 55, have a house worth nearly 7 figures, and are probably moving to Scottsdale. America's millionaires are older, college-educated, and white. They have some pretty valuable houses and stock holdings.
What net worth is considered poor in America? ›
Poor: Households in the 20th percentile, with a net worth of around $10,000, are categorized as poor. This group likely doesn't own a home and focuses financial resources on necessities.
How old is the average millionaire? ›
It should be no surprise that the average millionaire is older. It takes time to accumulate savings and let investment earnings grow. The median age of a millionaire household in America is 62. But here's how the percentage of millionaire households changes by age group.
What percent of households are millionaires? ›
Only about 3.5 percent of all U.S. households are in the million-dollar net worth league. All the groups listed in Table 1-2 are estimated to contain at least twice this proportion.
What is USA average household wealth? ›
The average net worth of American families is over $1.063 million, according to the most recent data from the Federal Reserve's 2022 Survey of Consumer Finances. The Federal Reserve conducts the survey for calculating average American net worth every three years; the most recent report was released in October 2023.
What household net worth is a millionaire? ›
A middle-age Millionaires' Row: Average 50-something now has net worth over $1 million. Sometime around age 50, the average American can now expect a household net worth exceeding $1 million. How did so many 50-somethings become millionaires? Household wealth swelled at a record pace during the pandemic.
What household net worth is considered wealthy? ›
In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.
