Why Are So Many Americans Now Millionaires?

If you feel like you’re falling behind in life, you’re not alone. Recent data suggests that there are now an estimated 22 million millionaires in the United States, an astonishing figure. That’s nearly 7% of the population. 

American workers are also seeing their wages rise faster than their European counterparts. We’re now at the point where a manager at Chipotle can earn more than most NHS doctors in the UK – a situation many people living in Western Europe could scarcely imagine 20 years ago. 

But why is this happening? What’s driving it? 

That’s the question we answer in this post. We look at why there are now so many American millionaires and what it means for regular people who’d like to increase their income, savings, and net worth. 

Growing Value Of Real Estate

The appreciation of real estate is the number one reason so many Americans now find themselves in the millionaire club. Homes are like piggy banks that expand in value every year, whether their owners like them or not. 

“People are starting to realize that if you own properties, the likelihood of them rising in value is substantial,” says Mortgage Quote, a broker that helps buyers and investors find homes that suit their requirements. “The government and banks continue to pump more money into the system which raises the price of these assets over time, making them a solid bet for anyone wanting to grow their wealth over time.”

Of course, real estate values are getting higher and higher. But that’s actually not a concern. As long as the underlying monetary dynamics remain sound, the housing price is unlikely to fall. And that’s perfect for millionaires who already own these properties. Even modest homes can command giant price tags in some regions of the country.

Financial Market Success

Image Credit: Austin Distel on Unsplash

At the same time, the American financial markets have been on a tear for the last fifteen years (really since the end of the Great Financial Crisis in early 2009). Stocks have seen their value soar more than virtually any other exchange in the world, thanks to the US government’s response to the recession, the payments from the pandemic, and the tax breaks that came into effect after 2016. 

Beating the market is notoriously challenging. But with performance similar to what we’ve seen over recent years, that’s not as much of a concern. There are structural reasons why the stock market is performing well and these are likely to persist into the future. And that’s why a lot of Americans have tipped over into millionaire status. Their stock portfolios are just doing so well. 

Technology And Innovation

At the same time, the US has secured itself as the tech leader for the planet. Nowhere else are there so many incredible companies all working toward AI, robotics, medicine, and biotech. 

These fields are particularly suited to the generation of millionaires because of how they use leverage. Once you develop a new technology, you can dominate the market and it’s almost impossible for anyone else to compete with you. That’s why there are so many tech billionaires. It comes with the territory. 

However, lower down the social strata, countless people supported these efforts and made incredible things happen. A lot of America’s 22 million millionaires are just individuals who came up with a good idea and sold it digitally at scale. 

Inheritance

A fair chunk of America’s 22 million millionaires are also people who inherited their money from successful parents. These individuals are often beneficiaries of the family business and continue running it themselves. 

With that said, not everyone who has money receives it from their relatives. In fact, most of America’s wealthy people are self-made. And even if they do pass on their wealth down the generations, it doesn’t always stick around for long. (Holding onto money is just as much of a skill as making it in the first place). 

More Than One Source Of Income

Americans with more than one source of income also seem to be a driving force behind the current spate of millionaires. US citizens seem to be getting smarter with money in general, trying new things, and taking to heart age-old financial advice that always seems to work. 

For example, most millionaires have the following sources of income: 

• A regular paycheck (or standard income paid from a company the individual owns)
• Rental from properties (usually vacation properties or investments in residential real estate)
• Dividends from privately owned businesses (sometimes managed by the owner)
• Stock market returns
• Crypto returns
• Additional businesses or side hustles
• Fixed income from bonds

Securing income from all these channels might seem like a bit of a chore. But over decades, it usually works. Diversification reduces risk while also increasing returns, allowing wealth to build rapidly over time. 

Education And Skills

At the same time, many of the most successful Americans are enhancing their education and building the skills needed to thrive in today’s marketplace. What’s more, many are avoiding the temptation to launch careers. Instead, they’re learning the skills that will help them become better business leaders in the future – things like marketing and finance. 

Education often contributes to financial success (and millionaire status) in surprising ways. The lessons people learn don’t always lead to riches immediately. But with enough learning and consistent effort over a lifetime, things eventually come together in a final crescendo of brilliance. 

Combining a high level of education with genius increases the likelihood of millionaire status even further. Highly intelligent individuals can often bring disparate concepts together and generate new ideas that have groundbreaking consequences in the real world., 

Beneficial Tax Policies

Image Credit: Joe Pregadio on Unsplash

Lastly, there’s some evidence that tax policies in the US are driving the higher number of millionaires. Unlike most countries, America is actively trying to cut back on taxes and help people keep more of their money in their pockets. 

However, that’s not the only thing the country does differently. It also incentivizes saving via various capital gains tax-free services, particularly for retirement (boomers are the largest group of millionaires. 

(Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)