A few decades ago, if you reached that magical million dollar level, you would have made it. You were rich. But these days, with costs skyrocketing and social media awash with luxury highlights, it can seem like everyone has a million in their pocket. The truth? That is more illusion than reality. As financial guru Dave Ramsey put it, “8 out of 10 people probably can’t afford the house they live in and the car they drive.”
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Social media has a tendency to magnify what appears to be wealth, leading to the widespread perception that everyone is swimming in money. But take a look behind the scenes and it’s clear that not as many people have cash as it seems. So let’s break it down: How many Americans have a net worth of $1 million or more?
Spoiler alert: there aren’t as many as you might think
According to the Federal Reserve’s 2022 Survey of Consumer Finances, only about 12% of U.S. households have a net worth above $1 million. This means that the vast majority – 88% – are nowhere near that level. Keep in mind that this is the net worth of the household, which likely assumes a two-person income and combined assets.
Wealth is highly concentrated, and while the average net worth of American households is $1.06 million, the average net worth is much lower: $192,700. Translation: A few very wealthy households drive up the average, but most people are much closer to that average.
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Where are the millionaires?
Certain states and age groups stand out because of their context. For example, New Jersey has the highest percentage of millionaire households, with approximately 9.76% of homes there having a net worth of more than $1 million. In terms of age, those between 65 and 74 have the highest average net worth at $1.2 million, but the median for that same group is only $266,400. In other words, while some retirees have saved a lot, many are just making ends meet.
401(k) balances tell a similar story. The average 401(k) balance for Americans age 65 and older is $272,588, but the median is just $88,488 — meaning half of people have less than that amount saved.
What does it mean to have $1 million?
A net worth of $1 million is not the same as having that amount in the bank. Net worth includes assets such as home equity, investments and retirement accounts – things that cannot easily be converted into cash. And with inflation driving up the cost of living, many Americans now consider $2.2 million the new minimum to feel “rich.”
See also: Can you guess how many people retire with $5,000,000 in savings? The percentage may shock you.
Are we all millionaires yet?
The short answer is no, not even close. And while social media may make it seem like everyone is living in luxury, the reality is much more modest. In fact, most people are still trying to build their financial safety nets, which makes those few million dollars of net worth seem rare and impressive.
The next time you scroll through someone’s highlight reel, remember: what you see is just that: a highlight.
If you want to reach that million-dollar mark yourself, it’s less about flashing and more about patience and steady saving. Let’s say you’re 35 and have already saved $20,000. Assuming an average annual return of 7% – a common benchmark for long-term investing – you would need to save about $5,000 per year or about $417 per month to reach $1 million by age 65. If you increase that amount as your income grows, you’ll reach your goal even faster. The key is consistency, allowing time and composition to work their magic.
Of course, this is just one scenario and everyone’s situation differs. The best way to plan your path is to talk to a financial advisor. They can help you tailor a strategy that fits your income, goals and lifestyle, whether you’re aiming for that million or a secure retirement.
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This article Can you guess what percentage of people saved $1 million? Spoiler Alert – It’s Much Lower Than Most Stats Would Believe originally appeared on Benzinga.com
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