Profile of An Average American Millionaire
Who is the prototypical American Millionaire? What would he tell you about himself!
• Is on average a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household’s income.
• About one in five of us is retired. About two-thirds of us who are employed are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors or lawyers.
• Many of the types of businesses we are in could be classified as dull-normal. We are welding contractors, auctioneers, farmers, owners of mobile home parks, pest controllers, coin and stamp dealers, and paving contractors.
• Our household’s total annual taxable income is $130,000, while our average income is $247,000 because the 8 percent of millionaires with higher incomes raise the averages.
• The typical millionaire household has a net worth of $1.6 million. Of course, some of our cohorts are worth much more.
• On average, our total annual taxable income is less than 7 percent of our wealth. In other words, we live on less than 7 percent of our wealth.
• Most of us are homeowners. We live in homes currently valued at an average of $320,000. About half of us have occupied the same home for more than twenty years. Thus, we have enjoyed significant increases in the value of our homes.
• Most of us have never felt at a disadvantage because we did not receive an inheritance. About 80 percent of us are first-generation affluent.
• We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current-model-year automobile. Only a minority of us ever lease our motor vehicles.
• Most of our wives are planners and meticulous budgeters. In fact, most of us will tell you that our wives are a lot more conservative with money than we are.
• We have accumulated enough wealth to live without working for more than ten years. Thus, those of us who have a net worth of more than $1.6 million could live comfortably for more than twelve years. Actually, we could live longer than that, because we save more than 15 percent of our earned income.
• We have more than six and one-half times the level of wealth of our non-millionaire neighbours, but, in our neighbourhood, these non-millionaire neighbours outnumber us three to one. Could it be that they have chosen to trade wealth for acquiring high-status material possessions.
• As a group, we are fairly well-educated. Only about one in five are not college graduates. Many of us hold advanced degrees.
• Only 17 percent of our spouses ever attended private schools, but 55 percent of our children are currently attending private schools or have attended private schools.
• As a group, we believe that education is extremely important for ourselves, our children and our grandchildren. We spend heavily on the education of our offspring.
• About two-thirds of us work between forty-five and fifty-five hours per week.
• We are fastidious investors. On average, we invest nearly 20 percent of our household realized income each year. Most of us invest at least 15 percent.
• We hold nearly 20 percent of our household’s wealth in transaction securities such as stocks and mutual funds, but we rarely sell our equity investments. We hold even more in our pension plans.
• As a group, we feel that our daughters are financially handicapped in comparison to our sons. Men seem to make more money even within the same occupational categories. That is why most of us would not hesitate to share some of our wealth with our daughters. Our sons, in general, have the deck of economic cards stacked in their favour. They should not need subsidies from their parents.
• What would be the ideal occupations for our children? With the number of millionaires growing much faster than the general population, our kids should consider providing the affluent with some valuable service. We recommend tax advising, law and estate-planning to our children.
• I am a tightwad. That’s one of the main reasons I completed a long questionnaire for a crispy $1 bill. Why else would I spend two or three hours being interviewed for a book for $250 or $300.
These quotes are taken from the book “The Millionaire Next Door” by Thomas Stanley and William Danko. The information was acquired through a survey of affluent first-generation millionaires. The views expressed are solely the opinions of the respondents.
I am sending this out as material information to keep everyone informed. This is not a solicitation for any investment. Before making any investment decision, please contact us for professional investment advice through our extensive planning process. This is only meant to provide perspective and update you as best as I can from the extensive ongoing research that we do.
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