Once upon a time, the image of a millionaire was someone aged, usually having inherited vast family fortunes or having amassed wealth over a lifetime of hard work. But the new face of millionaires in 2023? Younger, more self-reliant, and a reflection of modern economic strategies and opportunities.
The Rise of a Younger, Self-Made Millionaire
Recent findings by the Federal Reserve paint a fascinating picture. The average net worth of American families recently passed $1 million for the first time, a 42% rise from the figures of 2019. Shockingly, even when we account for inflation, this represents a real increase in wealth of 23% in just three years. Now, just over 12% of American families, which equates to approximately 16 million, can call themselves millionaires. That’s a significant jump from the 9.8 million families who held this status back in 2019.
This isn’t just about the ultra-rich pulling up averages. This wealth growth signals how a new generation of Americans have reached the coveted millionaire status through diverse avenues, contrasting significantly from past trajectories.
Education: The Game Changer
Gone are the days when dropping out of college to chase a startup dream was the only way to become a millionaire. Today, education is a prime indicator of future wealth. Mary Eschelbach Hansen, an economics professor, suggests that a college degree continues to offer excellent value, despite rising tuition costs. The return on investment for college degrees ranges from 13% to 36%. Furthermore, jobs requiring degrees often come bundled with benefits like employer-matched retirement savings and health insurance, contributing directly to wealth accumulation.
If you gain a college education, secure a stable, well-paying job, and adopt time-tested investment strategies, millionaire status is not just a possibility but a likelihood.
Millionaire Lifestyle and Choices
Surprisingly, the modern millionaire doesn’t necessarily belong to the uber-rich category. Many of these families, particularly those in the 80th to 90th income percentile, earn between $150,000 and $250,000 annually. Investments, career progress, and education are their wealth pillars. A stunning 90% of families have invested in stocks either directly or through retirement accounts, and a close 87% own their homes.
Younger millionaires, especially those from the millennial and Gen Z categories, are steering this wealth revolution. Over 600,000 millennial millionaires now exist in the U.S. Moreover, the number of millionaires within the millennial and Gen Z categories doubled in 2022. They aren’t just waiting for family inheritances; most make it on their own. Only 3% inherited significant sums from their families, while a whopping 79% received no inheritance whatsoever.
Instead of waiting for fortune to knock, they’re creating opportunities. With the digital age, many are translating their online savvy into tangible wealth. From investments in crypto and stocks to monetizing social media expertise, they’re embracing novel avenues to grow their wealth. Michelle Delker notes that this generation is harnessing technology, investing aggressively, and adopting frugal living to maximize their financial potential.
Shaping the New American Dream
Millennials and Gen Z are rewriting financial norms. They’re leveraging “hustle” culture, turning to side gigs to bolster their full-time incomes. They’re also enhancing their financial literacy, beginning savings early, and scouting for lucrative investments in their early 20s, instead of waiting till their 30s or later.
Aron Alexander, CEO of Runa, remarks in Newsweek that this surge of young millionaires is a testament to America’s economic resilience. The country presents unparalleled opportunities for individuals to attain financial success at younger ages. And while the tech sector offers a plethora of chances for budding entrepreneurs, it’s crucial to remember that not all is rosy.
Rising interest rates, inflation, and a shaky stock market have impacted the wealth of many young millionaires. The financial horizon appears uncertain for many, even those with significant assets.
The American dream is evolving. While the majority of millionaires are still older individuals, the paths to achieving this financial milestone are becoming more varied and accessible. Today’s millionaires are pioneers, redefining what it means to be wealthy in modern America. They serve as inspiration, showing that with the right choices, strategies, and a sprinkle of modern ingenuity, financial success is within grasp, no matter your age.