WSJ Article: Never Mind the 1%. Mini-Millionaires Are Where Wealth Is Growing Fastest

[schenbew]

I found this article very interesting, and think many members of this site qualify as "Mini-Millionaires" as the WSJ defines it.

An unlocked link to the article is here: https://www.wsj.com/us-news/never-m...fsw4oph4sry&reflink=desktopwebshare_permalink

I think the following quote, if accurate, is quite positive and MAY portend a slow reversal of the wealth gap that has steadily built up since the 1980s:

"Rather than being left behind as all the gains in the economy accrue to billionaires, they have in fact seen bigger wealth gains over the past three years than the top 10% of families. Indeed, the biggest wealth gains between 2019 and 2022 were among the approximately 13 million families in the 80th to 90th percentile of the income distribution. Their median wealth jumped 69% from 2019, adjusted for inflation, to $747,000 in 2022."

 

[Luvtoride]

Interesting article, thanks for posting and summarizing.
It seems that the government survey on these stats and the author are somewhat vague on the reasons for the growth of the mini-millionaires, which many of us on this forum qualify as.
Simply attributing our wealth level to college educations (thus higher salaries) and participating in employers 401k plans is an over simplification.
I believe that many (most) of us managed our lifestyles/ spending and investing habits with a keen sense of saving for retirement. Give credit where it’s due.

 

[Delawaredave5]

Great article - thanks for taking time to post.

"National average" and "all Americans" statistics are misleading because half the population has zero net worth.

This article seems more representative of this forum

 

[DrRoy]

Good story.

 

[Exchme]

The key bit:

...the economy, according to these numbers, is creating a growing upper middle class. Many people got there by pursuing college degrees, steadily building retirement accounts and purchasing homes. For the most part, they became wealthy slowly...​

Sounds like us!

 

[mrfeh]

"Rather than being left behind as all the gains in the economy accrue to billionaires, they have in fact seen bigger wealth gains over the past three years than the top 10% of families. Indeed, the biggest wealth gains between 2019 and 2022 were among the approximately 13 million families in the 80th to 90th percentile of the income distribution. Their median wealth jumped 69% from 2019, adjusted for inflation, to $747,000 in 2022."

Didn't read the article or do any research, but my gut says a big part of that increase is probably the result of the real estate market.

Those whose NW is comprised largely of the equity in their home would see the largest percentage change.

 

[fidler4]

I found this article very interesting, and think many members of this site qualify as "Mini-Millionaires" as the WSJ defines it.

An unlocked link to the article is here: https://www.wsj.com/us-news/never-m...fsw4oph4sry&reflink=desktopwebshare_permalink

I think the following quote, if accurate, is quite positive and MAY portend a slow reversal of the wealth gap that has steadily built up since the 1980s:

"Rather than being left behind as all the gains in the economy accrue to billionaires, they have in fact seen bigger wealth gains over the past three years than the top 10% of families. Indeed, the biggest wealth gains between 2019 and 2022 were among the approximately 13 million families in the 80th to 90th percentile of the income distribution. Their median wealth jumped 69% from 2019, adjusted for inflation, to $747,000 in 2022."

The original link was locked for me but I found the same article on another website:

https://www.livemint.com/economy/ne...wealth-is-growing-fastest-11698402889904.html

 

[frayne]

This is pretty much the nuts and guts of how and why these folks got to the one million mark. Home ownership, investing and lowering debt, what a radical concept to build wealth!

"Over 90% of these families report owning stocks, either directly or through retirement accounts, and 87% own their home. They benefited extraordinarily from low interest rates, cutting debt payments as a share of their incomes from 19% in 2007 to 12.9% in 2022."

 

[LateToFIRE]

The author seems to include home equity in the definition of millionaire, so yeh, there's a lot of folks who clear the bar by that route. That plus, a generous 401K plan would make it easier to reach $1M within a reasonable period of time, especially for two earner families. Many other ways, of course, but I think these two items account for the significant growth of the mini-millionaires.

 

[Closet_Gamer]

The author seems to include home equity in the definition of millionaire, so yeh, there's a lot of folks who clear the bar by that route. That plus, a generous 401K plan would make it easier to reach $1M within a reasonable period of time, especially for two earner families. Many other ways, of course, but I think these two items account for the significant growth of the mini-millionaires.

It would be interesting to know what % of the gain/wealth is home equity.

 

[Keim]

Good article. I also liked the concept when I first read it under the moniker of Millionaire Next Door.

 

[Poopycat]

I liked this article. Mini-millionaire is a good term for me. I’m a millionaire, but I don’t think of myself as being “loaded.” Just well off and fortunate. I did get an inheritance from my parents, but most of my wealth has come the old-fashioned way, through saving, continuing to pursue jobs that had higher salaries, and putting as much as I could in the investment options available to me. I’m not a spendthrift, but I’m not materialistic either, splurging only on travel and my few hobbies of interest.

 

[qwerty3656]

Could someone explain the chart in the article. Is it saying that 40% of people over 55 who have a college degree are millionaires? That seems way high to me?

 

[pb4uski]

Could someone explain the chart in the article. Is it saying that 40% of people over 55 who have a college degree are millionaires? That seems way high to me?

Sort of I think.

It's claiming that 45% of households headed by someone 55-64 yo with a college education are millionaires... so the remaining 55% are not millionaires along with, I suspect, a high percentage of households headed by someone 55-64 yo without a college education.

I guess that is plausible.

 

[LateToFIRE]

Could someone explain the chart in the article. Is it saying that 40% of people over 55 who have a college degree are millionaires? That seems way high to me?

That is the way I read it too.

Facts stated in the article:

For college grads between the ages 55-64:

* 45% were millionaires
* 26% multimillionaires and
* 11% with a net worth over $5 million

Further states the average college graduate’s net worth is over $2 million, but notes this stat is skewed by those at the very top.

Now, my spin on this is that you have to consider a number of things to put it in perspective:

(1) For the over 55-64 generation, college graduation rates were somewhat lower than today, roughly 30%, so you're really looking at 45% of 30%, or 14% of 55-64 year olds as NW greater than $1M.

(2) Home equity is included in NW. So, college-educated professionals especially in coastal cities can get a lot of the way there simply via home ownership. Want to say I saw somewhere that home equity was roughly 50% of the NW for this stat (not sure but seems plausible to me).

 

[Midpack]

Could someone explain the chart in the article. Is it saying that 40% of people over 55 who have a college degree are millionaires? That seems way high to me?

Probably because they are including home equity? Most here don’t include home equity in net worth by choice, because primary residence isn’t really liquid - gotta have a place to live. It’s always important to list assumptions…

And I’m sure many of us here are astounded by the appreciation we’ve seen in our homes, we sure are. We wouldn’t even look at the home/neighborhood we live in if we were looking to buy a house today…

 

[PatrickA5]

Home values should be considered part of net worth!! Ha! I said it. Maybe someone should start a thread on what should be considered in Net Worth. Kidding!!

My first house went from $86K to $175K in 20 years! Heck, I probably spent more than the $90K increase in upkeep over those 20 years.

Outside a couple of small inheritances, we accumulated our millionaire status the old fashion way - we saved it.

 

[aja8888]

I told my daughter to count the equity in my house in her net worth calculation because she will be selling it someday.

 

[LateToFIRE]

Home values should be considered part of net worth!! Ha! I said it. Maybe someone should start a thread on what should be considered in Net Worth. Kidding!!

My first house went from $86K to $175K in 20 years! Heck, I probably spent more than the $90K increase in upkeep over those 20 years.

Outside a couple of small inheritances, we accumulated our millionaire status the old fashion way - we saved it.

You're dang right home value should be counted in NW! That is part of the definition. I understand the rational for excluding for certain purposes, but that is a different metric IMO we should call that something like "Financial NW" or "Liquid NW," basically the portfolio assets you have for WD's which we tend to focus on in here. Yes, there are many varieties of calc's, but the OG is Assets-Liabilities=NW.

 

[USGrant1962]

You're dang right home value should be counted in NW! That is part of the definition. I understand the rational for excluding for certain purposes, but that is a different metric IMO we should call that something like "Financial NW" or "Liquid NW," basically the portfolio assets you have for WD's which we tend to focus on in here. Yes, there are many varieties of calc's, but the OG is Assets-Liabilities=NW.

Yes, the word is your "portfolio". Why people around here insist on calling their portfolio their net worth is a mystery.

 

[schenbew]

Some great observations in this thread; made me go the Federal Reserves Survey of Consumer Finances web page, where the data comes from, to figure it out.

The first thing is yes, real estate goes into the Total Assets calculation. Here's a screen shot of the Assets table from the report which can be found here on page 21:https://www.federalreserve.gov/publications/files/scf23.pdf

The question about "45% of households headed by someone 55-64 yo with a college education are millionaires" is tough to sort out. I found a page where you can slice and dice the data, and I found the following info which I took another screenshot of (link here: https://www.federalreserve.gov/econ...demographic:agecl;population:all;units:median

Based on what I see, the MEDIAN college educated household in 2022 had a net worth of $464.4M, so it seems very unlikely the 45% cited in the article is accurate. The mean result IS above $1M, but very likely skewed higher by the 1%, ultra high net worth types. Without knowing the total # of respondents and how they break down in the data, I cant figure out what % are millionaires or not. May be contained in the aggregate data I don't have the desire to dig into.

Give the data visualization link a try - very interesting stuff when you start investigating.

 

[schenbew]

I'm unable to edit my above post - I put in the incorrect chart. Here's the correct one broken down by age, not educational attainment:

 

[target2019]

In the 2nd chart I imagine the difference is home value.

 

[LateToFIRE]

The question about "45% of households headed by someone 55-64 yo with a college education are millionaires" is tough to sort out...

As previously noted, for the age 55-64 cohort, college graduation rates were somewhat lower than today, roughly 30%, so you're really looking at 45% of 30%, or 14% of 55-64 year olds with NW greater than $1M. This seems plausible when you consider the overall U.S. % of millionaires is generally quoted as 9%. It's also quite plausible when you consider that home equity probably accounts for a decent proportion of the NW of the so-called mini-millionaires. I would think of this cohort as the retired/near-retired professional class - long-time home owners who have benefited from the huge run-up in housing and stock valuations before and since the Great Recession, plus had access to generous 401K plans, RSU's, and other wealth enhancing vehicles, and were prodigious savers in the face of uncertainty about pensions or SS.

 

[CaptTom]

Interesting discussion, thanks all!

That said, it is interesting but not really informative. The whole concept of "millionaire" is sort of click-baity these days. With current home prices, almost everyone who owns a home is already half-way or three-quarters of the way there.

For example, if you had $1M in assets, invested, and wanted to take 4% per year, that's only $40K. Well below the US mean wage. Not exactly living on Easy Street these days.

The word "millionaire" used to mean something very different than it does today. Using it to imply the old meaning is an interesting observation about how language (and the economy) changes, but, as I said, not really informative.