AP’s Matt Sedensky, “Who wants to be a millionaire? 1 in 10 Americans already is but the status loses its luster.”
A surging number of everyday Americans now boast a seven-figure net worth once the domain of celebrities and CEOs. But as the ranks of millionaires grow fatter, the significance of the status is shifting alongside perceptions of what it takes to be truly rich.
“Millionaire used to sound like Rich Uncle Pennybags in a top hat,” says Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, a wealth management firm in El Segundo, California. “It’s no longer a backstage pass to palatial estates and caviar bumps. It’s the new mass-affluent middleweight class, financially secure but two zeros short of private-jet territory.”
Inflation, ballooning home values and a decades-long push into stock markets by average investors have lifted millions into millionairehood. A June report from Swiss bank UBS found about one-tenth of American adults are members of the seven-digit club, with 1,000 freshly minted millionaires added daily last year.
Thirty years ago, the IRS counted 1.6 million Americans with a net worth of $1 million or more. UBS — using data from the United Nations, World Bank, International Monetary Fund and central banks of countries around the globe — put the number at 23.8 million in the U.S. last year, a nearly 15-fold increase.
The expanding ranks of millionaires come as the gulf between rich and poor widens. The richest 10% of Americans hold two-thirds of household wealth, according to the Federal Reserve, averaging $8.1 million each. The bottom 50% hold 3% of wealth, with an average of just $60,000 to their names.
This isn’t exactly shocking. Inflation is a thing, after all.
Using the BLM Inflation Calculator, we see that a million in 1950 dollars would be $13.7 million today. Going back to 1970, my early childhood, it’s still $8.5 million. Even just going to the turn of the millennium, 2000,* it has almost doubled to $1.9 million.
Still, as Sedensky rightly notes, there’s a lot more than that at work.
When I was a kid, forty-odd years ago now, loved to read The Book of Lists, The Guinness Book of World Records, and the like. I recall there being something like five billionaires on the planet. Now, there are thousands. Granting that close to half a century has passed, inflation alone doesn’t account for that.
Widespread investment in the stock market is certainly part of it. The legal shift in the early 1980s, before I entered the workforce, to incentivize investment in mutual funds and the like to save for retirement, radically changed our behavior. I’ve been investing since I was a second lieutenant, way back in 1988.
I suspect most OTB regulars are millionaires if the standard is paper wealth. Very few of us likely consider ourselves “rich.”
*Yes, as a technical matter, 2000 was the last year of the previous millennium. Few think of it that way.
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Author: James Joyner
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