While money is so tight for many families during the cost of living crisis, the Federal Reserve has released data appearing to declare the average American household millionaires. However, a deeper dig into the data reveals the top income percentile were those who saw the greatest income increases over the past couple of years—while the middle-income homes lagged behind.
According to the Fed’sconsumer finance surveythe mean net worth of an American household, adjusted for inflation, was $1.06 million in 2022. In comparison, in 2019 the mean net worth of an average household was $868,000, marking a 23% jump.
Mean net worth is calculated by adding up the net worths of all American households and then dividing by the number of households.
Yet when looking at the median—another measure of the average, which represents the midpoint in the ranking and is less likely to be skewed by exceptionally high or low numbers—the typical American household was worth significantly less: $192,900.
Although that figure is less exciting for aspirational workers, it still represents an impressive after-inflation gain of 37% over three years.
However, when analyzing the income of American families it becomes apparent that those in the middle of the scale are being left behind.
The top 10% of earners, who have a net worth on average of $6.63 million according to the Fed, saw their income increase by over 22%, while the middle-income percentiles—between the 20 and 59.9 mark—experienced just a 5% boost in their income between 2019 and 2022.
While the Fed notes there has been “some” increase in inequality between households, the data also shows the gap has only gotten wider between those at the extreme ends of the scale. On both gains in income and net worth, those on the lowest end of the spectrum—in the less than 20 percentile—saw far lower increases than those in the top 10%.
Take net worth, for example. Median calculations estimate those in the >20 percentile saw their wealth increase 24%, while those on the top end of the scale enjoyed a 39% gain. Mean calculations of net worth actually show a drop of 2% for the lowest end between 2019 and 2022, while the top has gains of 18%.
Booming housing market creates millionaires
The research highlights the importance of getting on the property ladder if you want to build wealth.
Nearly two out of every three American families were homeowners last year, reflecting a slight increase from the previous three years—and as the housing market boomed during the pandemic, so did the net worth of property owners.
The average net worth of homeowners stood at $1.53 million in 2022, compared with just $155,000 for renters. Even in the U.K., over 41,000 homeowners became millionaires—a rise of 6% from the year prior —as house prices skyrocketed last year.
But while the surge in home prices has benefited those already on the ladder, it creates a financial setback for aspiring homeowners. Another Fed survey released in May, found that 65% of Americans who rent are doing so because they can’t afford a down payment to buy a home.
Still, 3.5 million people lost millionaire status last year
Although the average household is getting richer, the actual number of millionaires is declining.
The number of adults with assets of more than $1 million fell from 62.9 million at the end of 2021 to 59.4 million at the end of 2022, according to the UBS’s annual wealth report—and it’s the sharpest fall since the 2008 financial crash.
Even in the U.S., where there are significantly more millionaires than anywhere else in the world, 1.8 million people lost their “millionaire status” last year. Now, the total number of millionaires in the U.S. sits at around 22.7 million.
In the U.K., the number of millionaires fell by 440,000 to 2.6 million, the third largest fall behind Japan, which dropped from 3.2 million to 2.6 million. Meanwhile, the number of individuals globally with more than $50 million fell by 22,500 to 243,000.
Correction, Oct. 25, 2023: This article’s headline was updated after publication to reflect the income of the middle class, with clarifications on inequality and middle-class income added.
Learn how to take control of your personal finances with Get Your Due, our six-week email bootcamp. Sign up for free.
FAQs
To be precise, the mean net worth of an American household, adjusted for inflation, was $1.06 million in 2022, according to the Federal Reserve's consumer finance survey.
Are you in an average American family then you're a millionaire? ›
It seems hard to believe, and it's one of those cases where definitions mean everything, but the average family in America has achieved millionaire status. That's according to the Federal Reserve's latest authoritative survey of consumer finances, and it comes with lots of asterisks attached.
What is the average American family millionaire? ›
According to the 2022 Federal Reserve Consumer Finance Survey, the average American household's net worth, adjusted for inflation, was $1.06 million. That's right.
What percentage of American households are millionaires? ›
We estimate that all of the fifteen small-population ancestry groups shown in Table 1-2 have at least twice the proportion of millionaires than the proportion for all U.S. households. Only about 3.5 percent of all U.S. households are in the million-dollar net worth league.
What is considered millionaire status? ›
A millionaire is somebody with a net worth of at least $1 million. It's a simple math formula based on your net worth. When what you own (your assets) minus what you owe (your liabilities) equals more than a million dollars, you're a millionaire.
What is the average American household net worth? ›
Average Net Worth of an American Family
Both median and average family net worth surged between 2019 and 2022, according to the U.S. Federal Reserve. Average net worth increased by 23% to $1,063,700, the Fed reported in October 2023, the most recent year it published the data.
What household net worth is considered wealthy? ›
In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.
How much money does the average American household have? ›
In 2022, the median household income in the United States was $74,580, according to U.S. Census data, a decline of 2.3 percent decline from $76,330 in 2021.
At what point are you considered rich in America? ›
In the previous example, the median income would be $100,000—one person earns less, one earns more. By that measure, in 2022, the median U.S. household net worth was $192,900. So, if yours was higher than that, you don't need a million bucks to consider yourself “richer” than half of Americans.
Does net worth include home? ›
Household wealth or net worth is the value of assets owned by every member of the household minus their debt. The terms are used interchangeably in this report. Assets include owned homes, vehicles, financial accounts, retirement accounts, stocks, bonds and mutual funds, and more.
A millionaire is someone who has a net worth of a million dollars or more. Net worth is what you own minus what you owe.
What is considered a high net worth family? ›
A high net worth individual (HNWI) is someone with $1 million or more in investable assets, including cash or cash equivalents. HNWIs may rely on specialized financial services like wealth managers or private banks for money management, estate planning, investment guidance, and tax management.
What are the three things millionaires do not do? ›
Millionaires prioritize avoiding consumer debt, making wise financial decisions, and aligning spending with long-term goals.
What state do most millionaires live in? ›
Is 3.5 million net worth wealthy? ›
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
How many households have net worth over $100 million? ›
"Centi-millionaires" are individuals with investable assets greater than $100 million. The number of centi-millionaires in the world has more than doubled in the last 20 years and now stands at 28,420, a report released by a wealth advisory firm said.
How do 90% of people become millionaires? ›
Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined.
What percentage of American households make more than $100000 a year? ›
One estimate found that the median U.S. household income is $77,397. Only 18% of individual Americans make more than $100,000 a year, according to 2023 data from careers website Zippia. About 34% of U.S. households earn more than $100,000 a year, according to Zippia.
What percentage of the US population has $2 million dollars? ›
Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.
