Liam Gibson, Wealth of Geeks
Is becoming a millionaire losing its luster? The idea that anyone who works hard enough can make it big one day is a pillar holding up the American dream. Yet the shine could be starting to rub off.
Persistently high inflation threatens to erode once eye-watering fortunes. The creeping ubiquity of people with more than a million dollars to their name is sapping the title “millionaire” of its pizazz.
While multi-millionaires may have lavish lifestyles, that is seldom the case for newly-minted millionaires who’ve just crossed over the seven-figure mark.
According to celebrity entrepreneur and investor Grant Cardone, single-digit millionaires are “not wealthy… (but) worried.”
“Millionaires are basically middle-class people who are worried about money,” the controversial real estate mogul said last November. Cardone pointed out that a 30-year-old who retired on a million dollars and lived on $4,000 a month would be broke by age 51.
This may be a surprising wake-up call for all those pursuing financial independence who believe the journey ends at the fabled million-dollar milestone.
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Your average millionaire Joe
Millionaires are hardly a rarity in today’s America. In fact, they’ve become a fast-growing minority across the country. The US gained around 2.5 million millionaires in 2022 alone.
This now means around one in ten Americans are worth more than a million dollars, and the US has the most millionaires than any other country in the world, according to Credit Suisse’s latest Global Wealth Report.
While the number of millionaires is on the rise, the real-world value of their fortune is in decline.
With inflation at near historic highs (6% in February), no one can afford to keep their money sitting still if they hope to accumulate enough wealth to enjoy life in retirement. The spending power of millionaires and Average Joes alike is in retreat relative to what it was a few short years ago.
If the coming decade becomes marked by sustained high inflation, as some high net worth financial advisors predict, “millionaire” may never have the same ring to it.
“$1,000,000 in investable assets can definitely help someone’s lifestyle, yet it will not provide for a lifestyle like it would have in the 1970s or 1980s,” says Paul Doak, CFP and Director of ID FInancial. “(It) provides more options for people. It all depends on the goals and needs of the person.”
Even if reaching the million-dollar milestone becomes just a starting block of sorts, that doesn’t mean people will stop trying to get there.
“I don’t think that people will become less motivated to save and invest if being a millionaire loses its shine and becomes too normal,” says Larson Patty, Financial Planner at Rothman Investment Management. “I think being a millionaire will be the threshold, and multi-millionaire will become the new brass ring to reach for.”
Recent surveys show the wealthy are hardly free of financial woes. Less than half of all millionaires (44%) report feeling financially “very comfortable,” according to a report released by Edelman Financial Engines last year. Almost a third (29%) of millionaires said they don’t feel rich.
Wealth, like beauty, really is in the eye of the beholder.
“I think trying to get to $1 million in savings is a good goal, but without context, it’s really meaningless,” says Mike Hunsberger, head of Owner, Next Mission Financial Planning .
“$1 million in savings could be way more than they’ll need for someone who makes $50,000 but lives on $42,000, has a $22,000 pension, will get Social Security, and plans to retire at 70,” Hunsberger adds.
“$1 million is probably not near enough for someone who makes $350,000 and spends $325,000 a year and doesn’t have any pension. As with all financial planning, you need to understand how any “rules” apply to your situation.”
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Still beating the crowd
Even if it ain’t what it used to be, a million dollars is still a life-changing sum of money. After all, seen another way, having a million dollars puts you ahead of at least 90% of Americans.
“As someone who was fortunate to become a millionaire by the age of 30, I can tell you that I was extremely excited to hit that milestone,” says Zack Swad, President of Swad Wealth Management. “It opens many doors and drastically reduces the amount of stress you might have around finances.”
Becoming a millionaire, as seen from the perspective of someone who has reached that goal, may be an important milestone but not the end point of one’s financial journey. Needs and desires are fluid, and even after following a goal through to completion, people change in the process of getting there.
“I think people, like the money they accumulate, grow through stages,” says Jon McCardle, AIF, and President of Summit Financial Group of Indiana. After interfacing with clients over the years, Jon observes that most clients tend to talk less about money as they grow wealthier.
“I think everyone should take time to set personal, professional, spiritual, and economic goals,” he adds. “They should be well thought-out and mean something special to you.”
At the end of the day, a million dollars, or even two million dollars, is just another number. It may be a meaningful goal for one person, but not for everyone. As long as someone feels inspired by the financial goals they’ve set for themselves and develop while pursuing them, their life will be all the better for it.
