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.
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 does the average American consider rich? ›
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 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 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.
What age does the average American become a millionaire? ›
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 age group are most millionaires? ›
Americans between 50-54 have an average net worth of $1.13 million; while those in the 55-to-50 age group have an average net worth of $1.44 million, according to USA Today. In comparison, for people in their 20s, the average net worth is $120,896 for those aged 20-24 and $120,185 for those aged 25-29.
Is 3.5 million net worth wealthy? ›
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
Meet the typical millionaire: College-educated people in their 50s and 60s who own a home and lots of stocks. Over 12% of American families, or over 16 million, are millionaires, per the WSJ.
How long will $1 million last? ›
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
What income is considered upper class? ›
Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131. Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.
What is considered upper class in America? ›
The American upper class can be broken down into two groups: people of substantial means with a history of family wealth going back a century or more (called "old money") and families who have acquired their wealth more recently (e.g. fewer than 100 years), sometimes referred to as "Nouveau riche".
What is considered upper class? ›
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
What percent of US Americans are millionaires? ›
Here are some statistics about millionaires: There are about 22 million millionaires in the U.S. 8.8 % of U.S. adults are millionaires. 33% of U.S. millionaires are women.
What percentage of Americans make over $1000000 a year? ›
Despite only about 0.1% of Americans making over a million dollars a year, it seems like the number is much higher. If you want to get rich, you might as well focus on joining industries that pay very well.
What percentage of American households make more than $100000 a year? ›
Income distribution in the United States
Data source: U.S. Census Bureau (2023). Fifty percent of American households earn less than $75,000 per year. Just 37% of American households earn more than $100,000.
What percent of US households have a net worth over 2 million? ›
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.
