Millionaires are more common than you might think.
Many people dream of becoming a millionaire one day, and for a good chunk of the population, that dream is already a reality.
The Federal Reserve surveys American households every three years to catalog everything related to their finances and various demographic details. The most recent data come from the end of 2022, and the results may be surprising.
There are a growing number of millionaires in America, and that's not just due to inflation. Even after adjusting for inflation, the percentage of households with a net worth of at least seven figures (in 2022 dollars) zoomed higher from 2019 to 2022 after remaining relatively stable for the previous 18 years.
As of the most recent data from the Federal Reserve, about 18% of households were millionaires. That's approximately 23.7 million households in the United States. And with the strong stock market returns and appreciation in home prices since the end of 2022, it's a good bet there are even more in 2024.
But there are some important characteristics everyone should know about millionaire households. They may give you some ideas for what it takes to improve your net worth and become one (if you're not there already).
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The two biggest sources of wealth for millionaires
The Federal Reserve's survey covers all sorts of financial assets and liabilities: checking and savings accounts, CDs, life insurance policies, vehicles, rental properties and other real estate investments, and any loans outstanding, including credit card debt.
By far the two biggest sources of wealth for most millionaires, though, are investments, particularly in retirement accounts, and their primary residence.
The average millionaire has about $810,000 saved across retirement accounts. If you look exclusively at millionaires worth between $1 million and $3 million, retirement savings average about $450,000. That includes everything from an IRA and 401(k) to a Keogh and Thrift Savings Plan and pensions.
The average millionaire also has $743,000 in home equity. Those with net worths between $1 million and $3 million have about $503,000 of equity in their homes. That number accounts for the value of the home and any mortgage or HELOC balances owed.
While many people think the key to becoming a millionaire is to start your own business, only about 17% of millionaires have any small business equity. Only 11% of households with a net worth between $1 million and $3 million have any business equity, so starting a business isn't a requirement to becoming a millionaire.
How old is the average millionaire and how much do they earn?
It should be no surprise that the average millionaire is older. It takes time to accumulate savings and let investment earnings grow.
The median age of a millionaire household in America is 62. But here's how the percentage of millionaire households changes by age group.
| Age Group | 18-29 | 30-39 | 40-49 | 50-59 | 60-69 | 70-plus |
| % of Millionaire Households | 1.05% | 5.28% | 15.33% | 24.82% | 27.51% | 25.86% |
Data source: Federal Reserve Survey of Consumer Finances. Calculations by author. *For couples, the reference person is the male in mixed-sex couples and the older individual in same-sex couples.
As you can see, it's far more likely for a household with someone in their 50s or older to have a net worth exceeding $1 million versus households in their 20s and 30s.
The median income for millionaire households is $215,000. For households with a net worth between $1 million and $3 million, the median income was $164,000. That's certainly well above the median household income for all families ($70,000) but not completely out of reach, especially for families with two earners in their 40s and 50s.
Who wants to be a millionaire?
Based on the data collected by the Fed survey, the biggest key to unlocking millionaire status appears to be consistently saving and investing for a long time.
The average millionaire has a large balance in their retirement and brokerage accounts. That's likely due to starting young and letting compound earnings do their thing. Most millionaires are in their 60s or older. But if you start young, it doesn't take much to turn consistent savings into a portfolio worth hundreds of thousands of dollars.
The fact that most millionaires own a home and hold a significant amount of equity in it isn't in itself an endorsem*nt for home ownership. However, it is another forced savings mechanism, because each mortgage payment adds to the equity held in your home. And if home prices keep pace with inflation, it can be a good way to grow your wealth using debt.
While the average millionaire earns a high income, it's not an extraordinary figure, and they probably didn't start their career earning that much. Advancing your career, saving enough of your pay, and investing those savings in the stock market over time are all important elements of joining the two-comma club.
