The average net worth for an American household is now $1 million.
Millionaires once had a rarefied mystique, inspiring curiosity and causing envy among everyday Americans who dreamed of financial independence.
Just over 25 years ago, in 1999, “Who Wants to be a Millionaire” topped the primetime TV ratings over “Friends,” “ER,” and “Monday Night Football.” Magazines profiled “internet millionaires” during the dotcom boom, and rappers like Juvenile and Lil’ Wayne ushered in hip-hop’s bling era as part of a supergroup called the Cash Money Millionaires.
These days, though, millionaires aren’t what they used to be. They’re literally average.
The net worth of the mean American household is $1.06m, according to data from the Federal Reserve released last year, marking the first time average net worth has topped $1m. Altogether, according to an estimate by UBS Wealth Management, the United States is home to ~22m millionaire households — roughly one of every six households.
Millionaires are defined by owning at least $1m in total assets (stocks, retirement accounts, housing, etc.), minus debts. Some calculations of net worth exclude assets like primary residences, which brings the number of millionaire households down to ~15m, still a large number.
How did America get so many millionaires?
The Hustle tracked data on them going back to the 19th century, exploring the types of assets that contribute to a typical millionaire’s fortune, the effect of inheritances, and how the geography of wealth has drastically changed.
The growth of millionaires
Long before the era of Regis Philbin and get-rich-quick game shows, millionaires were exceedingly rare.
In 1848, just 50 households had achieved a net worth of at least $1m ($40m today), according to news accounts compiled by Gustavus Myers in the History of the Great American Fortunes. About half of those millionaires lived in New York City and Philadelphia, and the other half owned large plantations in the South, having built enormous fortunes off slave labor.
By the end of the 19th century, millionaire households soared to 4k as America industrialized and a laissez-faire economic system gave way to the Gilded Age, “almost certainly the gaudiest economic escalator of American history,” wrote Kevin Phillips in The Politics of Rich and Poor.
It certainly wasn’t the only escalator.
The Hustle
- Booms among the wealthy occurred in the 1910s and 1920s, when stock prices soared — then the Great Depression stymied millionaire growth until it picked up significantly during a time of tax cuts and stock market growth, including during the Reagan era.
- The three-year period from 2019 to 2022 saw one of the largest increases in mean net worth, with the Federal Reserve reporting elevated levels of pandemic-era savings and a record number of households claiming they’d earned higher-than-usual income.
It also helped that median net housing value (a home’s value, minus debt owed) increased from $139k to $201k in that timeframe, and stock prices increased well beyond inflation.
The inflated values of assets like homes and stocks have made it far easier to become a millionaire, which has also devalued the power of a million dollar fortune.
But America’s surge in millionaires isn’t just because of inflation.
A few years ago, New York University economist Edward Wolff used Federal Reserve data to calculate the number of millionaires over the last few decades using 1995 dollars to measure wealth over time.
- In 1983, the US had 2.4m households with a net worth of at least $1m in 1995 dollars — 2.9% of all US households.
- In 2016, the US had 9.1m households worth at least $1m in 1995 dollars — 7.2% of all US households.
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Another way to think about it: In 1962, ~1m-2m American households had a net worth of at least $100k, roughly $1m in today’s money, according to Federal Reserve data. With over 20m millionaire households today, the increase since then is more than tenfold.
Millionaires have also been buoyed by rising incomes, especially in the last few years. According to IRS data, the number of tax returns filed featuring a gross adjusted income of at least $1m grew by ~30% between 2020 and 2022.
The Hustle
Yet it’s worth noting that the massive increase in millionaires doesn’t speak to the financial health of overall Americans.
For one thing, measurements of mean/average net worth can be skewed by outlier fortunes. The median household net worth in the US is far smaller, at $192.9k, according to Federal Reserve data.
Net worth is also heavily concentrated among the wealthiest households. America’s top 10% of households by net worth owned ~67% of all US wealth as of last year.
That share was at ~70% in 2019, having increased during and after the Great Recession. It fell in the last five years as middle-and-lower income Americans regained a slightly higher share, albeit a share that is much smaller than in the early 1960s.
Even after this period of growth for most Americans, a higher net worth doesn’t guarantee an easier life. It depends on what assets are fuelling that growth — and millionaires tend to have a better mix.
Inheritances, stocks, and houses
With vastly more Americans worth at least $1m than in decades past, it’s important to ask: What have they done to get that money?
If you guessed nothing — that is, nothing besides being born into the right family — you’d be partially correct. Wealth transfers have contributed substantially to American wealth. But not quite as much as you might imagine.
As of 2022, according to Federal Reserve survey data, ~20% of US households reported having ever received a wealth transfer.
Wolff, who crunched Federal Reserve data from 1989 to 2013, found that households worth at least $1m (using 1998 dollars) were far more likely to have received a wealth transfer, at 45.1%. Some 18.8% of their net worth came from wealth transfers, the median wealth transfer from the period being worth $477k.
The likelihood of receiving a wealth transfer decreased in each net worth bracket, down to 9.1% for those with less than $25k of net worth. The size of the wealth transfers was also smaller — the median wealth transfer for households worth between $100k-$249.9k, for instance, was $89k.
But although households with lower net worths received fewer and smaller wealth transfers, their transfers comprised a larger share of their net worth.
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Surprisingly, because of this outsized effect on households with lower net worths, Wolff found that wealth transfers in the period he studied decreased wealth inequality rather than exacerbated it.
But millionaires still have plenty of advantages. Their fortunes have been driven by huge price increases in securities and stocks. Those assets comprise ~40% of a millionaire household’s net worth.
Households with lower net worths have a far lower share of stocks and securities and depend on primary residences, which account for ~65% of their net worth. That not only puts them at greater risk if real estate prices fall but gives them less flexibility to tap into their net worth for big purchases or everyday spending.
The Hustle
So, even as net worths went up the last few years and wealth inequality decreased, many Americans who aren’t millionaires didn’t feel any richer.
Where do millionaires live?
Back in 1979, the New York Times ran a story on the front page of its business section sharing a surprising nugget about newly-released millionaire data from the US Trust Corporation: Idaho had the highest share of millionaires of any state, ~2.9% of its population, while the country averaged ~0.25%.
Yes, Idaho. A state that now ranks in the bottom 10 in millionaires per capita. When it comes to evolving millionaire trends over the last few decades, geography has changed as much as anything.
In the late 1970s, Maine, North Dakota, Nebraska, and Indiana joined Idaho in the top 10, gaining an outsized share of millionaires in part because of their farms.
Commodity prices spiked and farm real estate prices more than doubled in the ‘70s, with large-scale farmers who’d purchased cheap land during a consolidation period in prior decades seeing their values skyrocket. Some local farmers sold out to developers seeking land on the suburban fringe and investors looking to hedge against inflation.
By the 1980s, farm real estate prices declined and didn’t climb back to their ‘70s value until the mid-2000s. At the top of recent millionaires per capita lists, rural states — and flyover country in general — are no longer represented.
The Hustle (Note: 2019 millionaire data is based on investable assets only, leading to lower shares than when assets like primary real estate are considered.)
America’s millionaires are now mostly on the coasts, in states with expensive real estate and high income jobs that generate more possibilities to save and invest.
