Fewer Millionaires in the U.S. – Does this Surprise You, and What Does it Mean?

Doesn’t everyone want to reach 7 figures?

Becoming a millionaire has historically been a mark of great financial accomplishment.  While it may not be quite the same grand accomplishment of days gone by due to the time value of money, millionaire status is something that many people would like to reach.  However, there were apparently less millionaires in the U.S. in 2011 according this interesting CNN Money article.

The article reference data that estimated 129,000 fewer millionaires in the U.S., despite a global increase of 175,000.  4.3% of people were estimated to be millionaires, versus 17% in Singapore.   Additionally, when looking at ultra high net worth people, the percentage in the U.S. did not make the top 15.

Surprised? Actually, I am a bit surprised.

Now, I do realize that there have been economic troubles here in the last few years, as I have personally felt some effects.  However, there are people out there making money, as there are some technology companies we know and love (maybe) that have been in the news for making serious money. Plus, it seems like the barriers to entry for entrepreneurs have come down, with opportunities opening up for many.

Nevertheless, there are some parts of the country that have been hit so hard in recent years that it may be hard to recognize when living elsewhere.  The extreme plight of someone in a rust belt city like Detroit might be completely lost on some people from, say, the San Francisco area, who are in the midst of growth and business creation and don’t see the utter devastation of a formerly prosperous area.  Maybe to some people, this is hardly a surprise at all!

It gets me thinking about two things:

  1. Is it truly harder to get ahead these days versus in days past?
  2. Will the financial and lifestyle expectations of our kids and future generations will be different than they had been in the past?

You know, it seems as if there are still many opportunities to grow net worth.   A starting point is getting a good education, as there is much evidence that education helps wealth (just be very careful with student loan debt).   Beyond this, being disciplined and making good career decisions, saving a solid percentage of income, and discerning wants from needs can all help one reach aspirational goals.  We can of course be derailed by bad health, bad luck, and other misfortunes – but making good decisions and following time-tested advice should help us go a long way, right?

According to the referenced data, 4.3% of the U.S. population is at millionaire status. While I’m in the other 95.7%, I still think that depending on where one lives and what choices are made, there are opportunities out there to succeed.  I want to think positively :)

My Questions for You:

  1. Does the data on millionaires (less in 2011, plus lower percentages in the U.S. than other countries) surprise you?
  2. Do you think it’s harder to get ahead these days than in days past?
  3. Do you think the expectations of future generations might be lower than today or a generation ago?

Comments

  1. says

    I guess it surprises me a little bit, but I think it could just be a brief trend. Plus, while it is easier now to start a company and entrepreneurship opportunities to exist, however more people could be earning just under $1 million. If they make 950,000 they are still doing okay, just not quite hitting that magic number.

    • Squirrelers says

      Kurt – I’m not sure that housing price corrections were a part of this actual analysis, but I could be wrong. Regardless, I’m sure that even if housing declines weren’t included here, they clearly did impact a ton of people.

  2. says

    Those are some serious questions! I have no answers, but definitely some things to think about. I have to admit, I am concerned about what is in store for future generations.For example, I think higher education is another bubble that will eventually burst, and so I am not sure what that will mean for my children.

    • Squirrelers says

      Sherrian, I too wonder about higher education as a bubble, though I also think that with people globally competing now, perhaps the market for higher ed has opened up?

  3. says

    I was a bit surprised. I think it is harder to get ahead these days than it was for people living in the 60s and the 70s in some ways, for the prices of houses and energy just isn’t the same. You can make the hedonic argument that cars and houses are much better today, but I think that only goes to a certain point. A house is a place to live, whether it has granite countertops or no. When a couple has to take out 25 years of debt just to afford a smallish, decent place, as many here in Canada do, then you know it’s not as easy as it used to be.

    I think there’s two trends that will affect the future. The near-term trend of debt bubbles reaching their limit is going to continue to make things harder, and as the rest of the world gets more developed, there will be more pressure on resources, more global competition, etc…. for some in the rest of the world, they may see it as getting easier, but for those of us in the west, things are going to seem harder. What if the US was no longer the reserve currency, then what? I think its days are numbered in an increasingly multipolar world.

    There are a lot of good trends, too. Whatever happens in the next 5 to 10 years, I think in the longer term it’s going to get much easier for all of us as technology provides easy access to renewable energy, cures disease and aging, and provides many wonders. At the same time, we had better manage that growth well because what are the social consequences of the world where human workers are no longer needed?

    I’m a long-term optimist and more of a pessimist or realist in the shorter term. Will it really be business as usual for the next 10 years? More debt? QE to the stars? Monstrous deficits? Something’s going to give.

    • Squirrelers says

      Great comment, Kevin. I think that your point on loans for smallish homes in Canada brings up the notion that real estate there hasn’t seen the same situation as what we have here in the U.S. In other words, a correction hasn’t happened for you guys. I realize the macroeconomic situation may be different, but I recall thinking those same thoughts here about 5 years ago. It just seemed hard to understand how first time buyers could actually afford a home. Now we see that home prices truly were inflated. I wonder if that reality will play out on your side of the border?

    • Squirrelers says

      FS – I suspect things might look rosier in the Bay Area than in quite a few areas around the country.

  4. says

    I’m not surprised. I bet a lot of people lost quite a bit of wealth when the stock market tanked in 2008. Since our economy is still recovering (I think) I’m guessing that it will be a few years before the number of millionaires ticks up. I don’t fall into that group either, but maybe someday I will!

  5. says

    One thing I’ve noticed is more companies aren’t rewarding top performers that much more than average Joe’s. So it’s harder to pull ahead and get compensated more for better performance. Not only is that demotivating, it’s hurting profitability because of higher turnover and less productive workers.

    • Squirrelers says

      Untemplaters – I think that a smart business would find a way to keep the people that truly help move the needle, the impact players. One would hope!

  6. Squirrelers says

    Aspiring Millionaire – I read a stat like that too. Remarkable, and something I think would truly surprise many of us here. It did me.

  7. says

    Just a few years ago I wrote a post about how America had reached 10 million millionaires. How quickly fortunes change.

    I think these things are cyclical to some extent, based on the economy. I also agree with Little House that the stock market crash likely had a lot to do with the decline in the number of millionaires.

  8. says

    I think part of it is definitely the paper losses of stock portfolios and real estate equity, but I also think on another level it may be a changing mentality towards wealth in general.

    There is a huge “green and simple living movement” out there, most especially with the gen Yers. Those young kids don’t necessarily aspire to work for “the man” anymore and are more likely to choose flexibility or an interesting job over the highest paid, highest stress option.

    Plus, boomers are entering retirement, so they are drawing down their nest eggs instead of building them, so part of it is just the demographics. Our biggest part of our population are no longer in the accumulating phase of their careers. They are spending their assets.

    Like you say, there are many factors in play here, but it’s not entirely surprising. The culture here in the states as well as our demographics vary quite a bit from Singapore, which reminds me much more of America in the late 80s/early 90s, where people’s identities were more closely tied to their net worth or job title.

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