What will federal estate tax changes have on generational wealth transfer? What will federal estate tax changes have on generational wealth transfer? 04:08
A million bucks isn't what it used to be. Just ask American millionaires, a number of whom say they don't even consider themselves wealthy.
To be sure, how far $1 million takes you can depend on a number of factors, including where you live and whether or not you support dependents. But the rest, apparently, is subjective.
Only one-third of American millionaires — or those with at least $1 million in investible assets — consider themselves "wealthy," according to a new study from Northwestern Mutual, a financial services firm. While two-thirds of millionaires might not feel rich, their substantial financial assets do afford them a greater sense of financial clarity over spending decisions, and preparedness compared with the general population, according to the survey.
And at a time when many Americans say they are woefully underprepared for retirement, 87% of these high-net worth individuals say they expect to be financially prepared for their golden years. That compares with 54% of the general public who say as much, according to Northwestern Mutual's survey.
When it comes to how they amassed their wealth, almost eight in 10 millionaires consider themselves "self-made."
By contrast, only 11% say they inherited their wealth, and 6% say they obtained it through a windfall event, like winning the lottery.
Financial discipline and planning can also play a significant role in reaching or surpassing the $1 million net-worth threshold. According to the survey, 78% of millionaires consider themselves "disciplined financial planners," compared with 45% of the general population who describe themselves this way.
Of course, it can be difficult to accumulate wealth even when one budgets and plans responsibly, particularly as food prices remain stubbornly high, and make affording the basics difficult.
And in larger U.S. cities, even Americans with higher incomes struggle to afford a home. Higher income earners — defined as those in the top 30% — can't comfortably afford to buy a home at any age in Boston, Denver, Los Angeles, New York, Sacramento, San Diego and Seattle, according to data from real estate investing platform Arrived. By contrast, in 2001, the top 30% of income earners could afford homes in some of these cities as early as age 24.
AKADriver on September 11st, 2024 at 13:49 UTC »
There's also hedonic adaptation and different people perceive wealth differently.
If you own a home and have retirement savings you may be a millionaire on paper but don't feel wealthy because you're still not able to spend extravagantly on luxuries.
But to someone without those things, that kind of financial security, not worrying about making rent, certainly looks like wealth.
As Americans we're also trained not to think of ourselves as rich. It's kind of in our culture especially for white people to say, I'm not one of those silver spoons, I just worked hard to earn this. Even to perceive actual plutocrats this way (cue the twitter user who described Elon Musk as working class and the local school board as the bourgeoisie).
steppedinhairball on September 11st, 2024 at 13:14 UTC »
A million dollars in the US isn't a lot of money. There are a lot of people who are technically worth over a million dollars. But that doesn't mean they have a lot of cash or are not living paycheck to paycheck.
defroach84 on September 11st, 2024 at 13:05 UTC »
Having a million dollars isn't some crazy number these days. And, it also depends how they calculate this. A ton of people have at least a million solely due to how real estate sky rocketed, regardless how much physical cash they have accessible.
Just having a million in assets doesn't make you wealthy. Are you doing alright? Very likely, but you still could easily be living paycheck to paycheck.