💰 American Family Finances and the New Millionaire Reality

In recent years, the United States has seen a significant surge in its millionaire population, with more than 24 million individuals now possessing a net worth exceeding $1 million. This translates to roughly one in every 11 adults. When measured by households, the Federal Reserve’s 2022 data indicates that approximately 18% of U.S. households are millionaires, a figure that represents about 23.7 million households.Drivers of Wealth GrowthThe rapid increase in the number of millionaires is attributed more to inflation and surging home values than to a broad rise in general prosperity. Between 2019 and 2025, the median U.S. home price increased by an estimated 45%, pushing many homeowners into the millionaire category on paper. Indeed, the two primary sources of wealth for most millionaires are their primary residence and their investments, particularly those held in retirement accounts.While approximately 18% of households are millionaires when including home equity, the share drops to about 12.5%when home equity is excluded from the calculation. Despite these high numbers, the "millionaire" status has lost some of its traditional luster; only 36% of U.S. millionaires currently consider themselves "wealthy". This sentiment is driven by the erosion of purchasing power; for context, $1 million in 1980 provided the same purchasing power as roughly $3.2 million today.Characteristics of U.S. MillionairesAge and Income: The median age of a millionaire household is 62, reflecting the time required for consistent saving and compound interest to grow. The median income for these households is approximately $215,000.Self-Made Status: Roughly 80% of millionaires consider themselves "self-made," while only 11% report inheriting their wealth.Financial Discipline: Millionaires are significantly more likely to describe themselves as disciplined financial planners (78%) compared to the general population (45%).The Reality of "Tax Flight"Contrary to popular belief that the wealthy frequently move to avoid high taxes, the sources suggest that millionaires are actually "embedded elites" who are less mobile than the general population.Lower Migration Rates: The annual migration rate for millionaires is only 2.4%, which is lower than the general population's rate of 2.9% and much lower than the 4.5% rate seen among the poor.Social Anchors: Millionaires are often tied to their locations by business ownership (23% vs. 4% of the general public) and family responsibilities. Approximately 90% of millionaires are married and 50% have children at home, both of which serve as significant anchors against moving.The Florida Effect: Most net millionaire migration to lower-tax states is driven almost entirely by movement into Florida. Excluding Florida, it is nearly as likely for a millionaire to move to a state with a higher tax rate as it is to move to one with a lower rate.Geographic Wealth HubsWealth growth has not been uniform across the country. Several cities have emerged as high-growth hubs for millionaires between 2014 and 2024:Scottsdale led the nation with a 125% increase in its millionaire population.The Bay Area saw 98% growth, driven by its status as the epicenter of the tech innovation ecosystem.West Palm Beach (112%), Miami (94%), and Austin (90%) also recorded massive increases in their resident millionaire populations.While the U.S. remains a top destination for global wealth migration, an increasing number of affluent Americans are also looking abroad for alternative residence and citizenship as a form of "strategic risk management". In early 2025, U.S. citizens accounted for over 30% of investment migration applications handled by leading specialists.Become a supporter of this podcast: https://www.spreaker.com/podcast/the-money-lab--6886555/support.