- The average age of American millionaires rose to 61 in 2022, compared to 57 in 1992.
- Young workers struggle to accumulate wealth, leading them to rely more on inheritances.
- Baby boomers’ accumulation of wealth impacts economic factors such as consumer spending and housing.
American millionaires are getting older.
While it makes sense that time is often a crucial element in accumulating savings and assets, the average age of millionaires in the United States has increased faster than the average age of the overall population over the past three decades .
It’s the age of geriatric millionaires, and that could point to overlapping problems: Young workers can no longer accumulate wealth at the same rate as before, and increasingly, how to climb the wealth ladder is to receive inheritances.
“Multigenerational wealth is doing well, but first-generation people who aren’t on the wealth bandwagon are having a harder time getting by,” Chuck Collins, director of the Inequality Program and co-editor of inequality.org at the left-leaning Institute for Policy Studies told Business Insider.
This is bad news for the American dream of succeeding as a self-made entrepreneur. According to Forbes, a third of the people on its latest billionaires list inherited all or most of their wealth; In its 2001 ranking, only five of the 490 billionaires ranked were listed as having inherited their wealth. And in many cases, these people inherit this wealth much later in life.
“Millionaires are getting older and they’re not passing that wealth down from one generation to the next or they’re passing it on much later in life. Even the beneficiaries are old,” Collins said.
These forces are combining to concentrate a growing share of wealth in the hands of America’s octogenarians. That could cause problems for the economy – and see even more power wielded by a cohort who might not be around to see how things play out.
How millionaires evolve
Since 1992, the average age of the country’s millionaires has been increasing. We looked at the Survey of Consumer Finances data for Americans with a net worth of $1 million or more in 2022 dollars, and compared their 2022 demographics – the most recent year for which we we have data – and from 1992.
In 1992, the average millionaire was around 57 years old. In 2022, the average millionaire is around 61 years old. This means that young millionaires are not joining their ranks quickly enough to keep the average age stable.
Of course, this can partly be attributed to the aging population. After all, the United States is aging, and geriatric Americans hold more power than ever. So, to analyze the situation of millionaires compared to the rest of the population, we examined the age distribution in 1992 and 2022.
Here’s what the general population – and millionaires – looked like in 1992. Millionaires are overrepresented from around age 50, but they pretty clearly follow the 40-year-old cohort.
In comparison, millionaires were more over-represented in the cohort aged 60 and over from 2022.
In addition to millionaires whose net worth exceeds $1 million, Americans who earn an annual salary of $1 million are also older.
Garrett Watson, senior policy analyst at the Tax Foundation, analyzed IRS SOI data and found that in 2011, about 59,500 Americans age 65 and older reported earning more than $1 million; in 2021, that figure has nearly quadrupled, with just under 218,500 Americans age 65 and older earning more than $1 million.
“We collect a lot of our tax revenue from these people – older people who generally have higher incomes or net worth and who tend to have higher incomes – which is a good thing; it obviously highlights the progressiveness of the system,” Watson said. . “At the same time, we have many provisions in our tax system that benefit these people.”
What does it mean to have so many older millionaires?
Of course, this doesn’t mean the picture is completely bleak for young Americans. Pandemic-related stimulus measures, combined with an unprecedented rise in the job market, real estate and stocks, allowed millennials, regardless of their income, to double their wealth between 2019 and 2023.
According to our Business Insider analysis, 9.8% of millionaires are between 35 and 44 years old. This represents a respectable slice of thirty- and forty-year-olds who can claim millionaire status. Meanwhile, around 19% of millionaires are between 45 and 54 years old.
Yet the average net worth of millennials sits at about $128,000, compared to about $1.2 million for baby boomers, and many millennials feel insecure financially due to high housing costs and student debt.
Meanwhile, members of Generation X face their own economic precarity. Among all generations, they hold the most liabilities and spend the most on housing and shelter among all cohorts. Gen Xers are also the first generation to face overlapping retirement crises, as they must foot the bill for their retirement years and could also face reduced Social Security. Both generations have faced wages that have not kept pace with productivity.
The increasing accumulation of wealth in the hands of older people impacts consumer spending, employment, housing, etc.
The baby boomer generation holds half of the combined net worth in the United States and was responsible for 22% of all spending in 2022, according to the Department of Labor’s September consumer spending survey.
This supported consumer spending, even as the savings rate fell and inflation remained stubbornly high. This has also had an impact on the job market, with jobs aimed at baby boomers taking off.
“Thanks to all the retirees and seniors, spending on air travel, hotels and motels, food, and health services are all at or near new highs,” wrote veteran market strategist Ed Yardeni , earlier this year. “That’s because older adults are traveling more, dining out more, and visiting their health care providers more. As a result, wage employment in all of these industries continues to reach record levels.”
And baby boomers aren’t just enjoying their vacations. They also retain some of their largest and most valuable assets: the big houses.
A growing number of baby boomers are keeping their larger homes longer, limiting the supply available for young families. Redfin’s analysis of U.S. Census data found that 28% of U.S. homes with three or more bedrooms are owned by empty nesters ages 60 to 78. That’s double the percentage of millennials who have children and own homes of similar sizes.
Finally, the era of geriatric millionaires has the potential to create what Chuck Collins of the Institute for Policy Studies has called the “King Charles effect,” referring to King Charles III of the United Kingdom, who ascended the throne at the age of 73.
“Instead of 60-year-olds giving to 30-year-olds, it will be 90-year-olds giving to 60-year-olds – meaning that because these rich people keep their wealth longer, this transfer “We’ve all heard about the fact that it’s later in life for a lot of people,” Collins said.
“It’s a lot different to inherit a few million dollars in your 20s than when you’re in your 60s. You’ve already made a lot of decisions in your life.”