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 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.
What percentage of Americans become 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.
How many American households have $1 million net worth? ›
As 2020, the number households with a net worth of one million U.S. dollars or more (excluding primary residence) stood at 11.6 million, up from 11 million in 2019.
What is considered a millionaire household? ›
What Is a Millionaire? A millionaire is somebody with a net worth of at least $1 million. It's a simple math formula based on your net worth. When what you own (your assets) minus what you owe (your liabilities) equals more than a million dollars, you're a millionaire. That's it!
Can an average person be 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 is the average age to reach $1 million? ›
The average age of millionaires is 57, indicating that, for most people, it takes three or four decades of hard work to accumulate substantial wealth. Research was conducted by the authors, Thomas Stanley, Ph. D., and William D. Danko, Ph.
What is the average US household net worth? ›
Average Net Worth of an American Family
Both median and average family net worth surged between 2019 and 2022, according to the U.S. Federal Reserve. Average net worth increased by 23% to $1,063,700, the Fed reported in October 2023, the most recent year it published the data.
At what age should you have $1 million dollars? ›
Based on this, if you retire at age 65 and live until you turn 84, $1 million will probably be enough retirement savings for you.
What is a good net worth by age? ›
Average net worth by age
| Age by decade | Average net worth | Median net worth |
|---|
| 40s | $713,796 | $126,881 |
| 50s | $1,310,775 | $292,085 |
| 60s | $1,634,724 | $454,489 |
| 70s | $1,588,886 | $378,018 |
4 more rowsThe 10 things that millionaires typically avoid spending their money on include credit card debt, lottery tickets, expensive cars, impulse purchases, late fees, designer clothes, groceries and household items, luxury housing, entertainment and leisure, and low-interest savings accounts.
What do 90% of millionaires do? ›
Real estate investment is not a get-rich-quick scheme. Instead, it's a long-term strategy that can steadily build wealth over time. As you continue to own and manage properties, their value appreciates, and your equity grows. Diversifying your investment portfolio is a crucial wealth-building strategy.
What is considered wealthy net worth? ›
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
How old are most millionaires? ›
Millionaires — those who have a net worth of at least $1 million —are, perhaps not surprisingly, on the older end. They're predominantly 55 and older; just 2.4% are under the age of 35.
What is considered wealthy in the USA today? ›
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.
What is USA average household wealth? ›
Average Net Worth of an American Family
Both median and average family net worth surged between 2019 and 2022, according to the U.S. Federal Reserve. Average net worth increased by 23% to $1,063,700, the Fed reported in October 2023, the most recent year it published the data.
What percentage of American households make over $100000 a year? ›
Percentage distribution of household income in the United States in 2022
| Annual household income in U.S. dollars | Percentage of U.S. households |
|---|
| 75,000 to 99,999 | 12.3% |
| 100,000 to 149,999 | 16.4% |
| 150,000 to 199,999 | 9.2% |
| 200,000 and over | 11.9% |
5 more rowsNov 3, 2023
Between 2019 and 2022, the median net worth of U.S. households surged 37% to $192,900, according to the report. The mean, or average, net worth increased 23% to $1,063,700.
What percentage of Americans make over $1000000 a year? ›
If you earn over $1 million a year, President Biden wants to raise the long-term capital gains tax rate from 20% to 39.4%. Despite only about 0.1% of Americans making over a million dollars a year, it seems like the number is much higher.
