While it makes sense that time is often an essential ingredient in accumulating savings and assets, the average age of US millionaires has risen faster than the average age of the general population over the past three decades.
It’s the age of the geriatric millionaire, and it may point to overlapping issues: Young workers can’t accumulate wealth at the same rate as they once did, and increasingly, the way to climb the ranks of the wealthy is to inherit .
“Multigenerational wealth is doing well, but first-generation people who aren’t on the wealth train are having a harder time getting on board,” Chuck Collins, director of the inequality program and co-editor of inequality.org at the Institute for Research Left-leaning politician, told Business Insider.
This is bad news for the American dream to strike it as a self-made entrepreneur. According to Forbes, a third of the people on the latest billionaires list inherited all or most of their wealth; in the 2001 ranking, only five of the 490 billionaires listed were listed as having inherited their wealth. And in many cases, those individuals are inheriting that wealth much later in life.
“Millionaires are getting older, and they’re not passing that wealth down or they’re passing it down much later in life. The recipients are getting older, too,” Collins said.
These forces are combining to concentrate an increasing share of wealth in the hands of America’s octogenarians. It could spell trouble for the economy — and see even more power wielded by a group that may not be here to see how it works.
How millionaires are changing
Since 1992, the average age of the country’s millionaires has increased. We looked at Survey of Consumer Finances data for Americans with net worth of $1 million or more in 2022 dollars and compared their demographics from 2022 — the most recent year for which we have data — and 1992.
In 1992, the average millionaire was about 57 years old. By 2022, the average millionaire was about 61 years old. That means younger millionaires aren’t joining their ranks fast enough to keep the average age stable.
Of course, some of them can be chalked up to the aging of the population. After all, the US is aging, and geriatric Americans are holding more power than ever before. So, to analyze how millionaires stack up to the rest of the population, we looked at age divisions in both 1992 and 2022.
Here’s what the general population — and millionaires — looked like in 1992. Millionaires are overrepresented starting around age 50, but follow the pack pretty clearly in their 40s.
Comparatively, millionaires were more overrepresented in the 60+ group as of 2022.
In addition to millionaires with a net worth of more than $1 million, Americans earning an annual salary of $1 million are also on the rise.
Garrett Watson, a senior policy analyst at the Tax Foundation, analyzed IRS SOI data and found that in 2011, about 59,500 Americans 65 and older reported earning over $1 million; as of 2021, that has nearly quadrupled, with just under 218,500 Americans 65 and older earning over $1 million.
“We’re collecting a good portion of our tax revenue from these people — older people who typically have higher incomes or higher net worth who tend to have higher incomes — which is good ; this definitely underlines the progressiveness of the system,” Watson said. . “At the same time, we have many provisions in our fiscal system that benefit these people.”
What does it mean to have so many older millionaires?
Of course, that doesn’t mean the picture is completely bleak for young Americans. The pandemic stimulus, coupled with an unprecedented job market, real estate and stock gains, meant that millennials across the income spectrum were able to double their wealth from 2019 to 2023.
According to our Business Insider analysis, 9.8% of millionaires are between 35 and 44 years old. That’s a respectable portion of 30- and 40-somethings who can claim millionaire status. Meanwhile, about 19% of millionaires are between 45 and 54 years old.
However, the median net worth for millennials stands at about $128,000 compared to about $1.2 million for baby boomers, and many millennials don’t feel financially secure amid high housing costs and student loan debt loads.
Gen Xers, meanwhile, are dealing with their own economic insecurity. They carry more liabilities than any generation and are spending more on shelter and housing than all groups. Gen Xers are also the first generation to face pension overlap crises, as they are left to pick up the bills for their retirement years and may also face cuts to Social Security. Both generations have dealt with wages that have not kept pace with productivity.
The growing accumulation of wealth in the hands of the elderly affects consumer spending, employment, housing and more.
The boomer generation holds half of the combined net worth in the US and was behind 22% of all spending in 2022, according to the Labor Department’s September survey of consumer spending.
This has supported consumer spending, even as the savings rate has fallen and inflation has remained stubbornly high. It has also affected the job market, with jobs catering to adults.
“Thanks to all the seniors retiring and retiring, spending on air travel, hotels and motels, food and health care services have all risen to new or near record levels,” veteran market strategist Ed Yarden wrote early on. of this year. “That’s because seniors are traveling more, eating out more and visiting their health care providers more. As a result, payroll employment in all of these industries continues to grow at record levels.”
And boomers aren’t just living it up on vacation. They’re also keeping some of their biggest and most valuable assets: big houses.
A growing number of baby boomers are keeping their large homes for longer, limiting the supply available to younger families. Redfin’s analysis of US Census data found that 28% of homes across the US with three or more bedrooms are owned by empty nesters between the ages of 60 and 78. That’s double the percentage of millennials with children who own similarly sized homes.
Finally, the age of geriatric millionaires has the potential to create what Chuck Collins at the Institute for Policy Studies called the “King Charles Effect,” referring to the United Kingdom’s King Charles III, who ascended the throne at age 73. year.
“Instead of 60-year-olds giving to 30-year-olds, it’s going to be 90-year-olds giving to 60-year-olds – which means that because these wealthy people are holding on to wealth longer, it intergenerational wealth transfer we’ve all heard is later in life for a lot of people,” said Collins.
“It’s very different to inherit a few million dollars when you’re in your twenties than when you’re in your sixties. You’ve already made a lot of decisions in your life.”