It’s a common belief that becoming a millionaire is an unattainable dream for most people. However, at Ramsey Solutions, we’re passionate about debunking that myth. The truth is, the path to becoming a millionaire is more accessible than you might think. Millions of Americans have already achieved this milestone through hard work, smart saving, and consistent investing. In fact, you could be living next door to one and not even realize it!
This article will delve into the impressive number of millionaires in the United States, reveal some surprising facts about them, and guide you on how you can join their ranks.
Unveiling the Millionaire Population in the U.S.
Are you curious about just how many millionaires reside in the United States? Recent data indicates a staggering number: almost 24.5 million millionaires currently live in the U.S. ^1^. To truly grasp the scale, that’s more than the entire population of Florida! ^2^ And this number isn’t stagnant; it’s continuously growing.
What’s even more intriguing is that the image of a typical millionaire might be far from reality. Ramsey Solutions conducted the largest study of millionaires ever undertaken in 2017 and 2018. The findings revealed that most millionaires didn’t inherit their wealth, don’t flaunt extravagant lifestyles with sports cars, or dine at fancy restaurants every night. Instead, the vast majority are ordinary, everyday individuals who have adopted fundamental, sound money habits.
This might sound surprising, but the exciting news is this: you have the potential to become one of them. Yes, you too can be a future millionaire!
Defining a Millionaire: Beyond the Myths
So, what exactly defines a millionaire? Simply put, a millionaire is an individual with a net worth of one million dollars or more. Net worth is calculated by subtracting your liabilities (what you owe) from your assets (what you own). It’s a straightforward calculation.
For instance, consider someone with a robust emergency fund, a healthy retirement account, and a mortgage as their only debt. To determine their net worth, you would add up their emergency savings, retirement account balance, and the value of their home. Then, subtract the outstanding mortgage amount. The result is their net worth.
A significant portion of a millionaire’s net worth typically comprises investments in retirement accounts and real estate, often including a fully paid-off home. Furthermore, millionaires generally steer clear of debt. Remarkably, 73% of millionaires have never carried a credit card balance in their entire lives. ^3^
To gain a clearer picture of your own financial standing, you can utilize a free tool like the Net Worth Calculator. It’s a quick, user-friendly resource that can help you assess your current net worth and provide guidance on the next steps to build it further.
Dave Ramsey’s latest book introduces the concept of Baby Steps Millionaires. These are individuals who have utilized the 7 Baby Steps not only to eliminate debt but also to accumulate wealth and achieve millionaire status over time. This book offers deeper insights into the proven strategies millions of Americans have employed to become millionaires, and how you can follow in their footsteps.
Millionaire Hotspots: States and Cities with the Highest Concentration
With millions of millionaires across the U.S., they’re undoubtedly distributed across different states. It’s probably no surprise that certain states stand out.
Our research has broken down the number of millionaire residents in each state. Unsurprisingly, California and New York lead the pack with the highest millionaire populations. However, even if you don’t reside in these states, you might be surprised to see if your state makes it into the top 10.
Here are the top 10 states with the highest number of millionaires:
- California
- New York
- Florida
- Texas
- Illinois
- Pennsylvania
- Arizona
- New Jersey
- Ohio
- Massachusetts
If your state isn’t on this list, don’t be discouraged. A lower ranking doesn’t diminish your chances of becoming a millionaire. It might simply indicate that your state has a smaller overall population compared to the top-ranking states.
To gain a different perspective, let’s examine which U.S. cities have the highest percentage of millionaires relative to their population. Here are the top 10 cities in this category:
- New York, NY: 8.51%
- Los Angeles, CA: 5.34%
- Chicago, IL: 4.45%
- San Francisco, CA: 3.46%
- Washington, D.C.: 3.36%
- Philadelphia, PA: 3.26%
- Phoenix, AZ: 2.97%
- St. Louis, MO: 2.37%
- Tampa, FL: 1.88%
- Orlando, FL: 1.68%
Is Being a Millionaire Truly “Rich”? Perspective Matters
The term “millionaire” often conjures images of extreme wealth. While reaching millionaire status is undoubtedly a significant financial achievement, the perception of “rich” can be subjective.
The word “millionaire” is frequently used as a blanket term for wealthy individuals. You might envision a millionaire living in a mansion, indulging in luxury goods, and living an extravagant lifestyle. While millionaires are certainly financially comfortable, their wealth might not equate to the stereotypical “money bin” level of riches.
Several factors contribute to this perspective. Firstly, the purchasing power of a million dollars has decreased over time due to inflation. ^4^ A million dollars in 1955 had significantly more buying power than it does today. Using the Bureau of Labor Statistics’ CPI inflation calculator, a million dollars in 1955 would be equivalent to approximately $11.4 million today. Therefore, while a millionaire today is financially successful, they may not possess the same level of “super-rich” status as someone with a million dollars decades ago.
Secondly, the perceived wealth of a millionaire is influenced by location. The cost of living varies significantly across the U.S. In major metropolitan areas and certain states, maintaining a comfortable lifestyle requires considerably more money than in less expensive regions. For example, living in New York City is significantly more costly than living in Lewiston, Idaho. This is why many individuals from high-cost areas choose to retire in states with lower living expenses, as their money stretches further.
As highlighted earlier, the lifestyles of most millionaires are surprisingly ordinary. Their financial success stems from intentional financial planning and disciplined habits adopted early in life.
Consider these eye-opening statistics from The National Study of Millionaires:
- Over 50% of millionaires reside in neighborhoods where the average household income is below $75,000 per year.
- Nearly one-third of millionaires live in zip codes where home values are below the national median average.
- Six out of ten millionaires live in houses valued under $500,000.
These statistics reinforce the idea that millionaires are often your everyday neighbors, living amongst you without drawing attention to their wealth. If you’re interested in delving deeper into the research on millionaires and their wealth-building strategies, explore The National Study of Millionaires.
The Timeline to Millionaire Status: It’s a Marathon, Not a Sprint
Becoming a millionaire isn’t typically an overnight phenomenon. It’s a journey that requires time, dedication, and consistent effort.
In fact, only 5% of millionaires surveyed achieved that status in 10 years or less. For the majority, it took an average of 28 years to reach the million-dollar mark, with most achieving this milestone around the age of 49. ^5^
However, for those following the Baby Steps approach, the timeline can be accelerated. Baby Steps Millionaires often reach millionaire status in 20 years or less from the beginning of their financial journey.
Here’s a typical timeline breakdown for Baby Steps followers:
- Baby Steps 1-3 (Debt elimination and emergency fund): Approximately 2.5 to 3 years.
- Baby Steps 4-7 (Investing for retirement, saving for college, paying off home early): An additional 17 years or less to reach millionaire status.
The key takeaway is that becoming a millionaire is a long-term endeavor. There are no quick fixes or get-rich-quick schemes. It’s a process built on decades of consistent work, saving, and strategic investing. Millions of Americans have demonstrated that following the Baby Steps provides a proven and effective path to achieving a million-dollar net worth.
Building Wealth: Your Path to Millionaire Status
The good news is that you absolutely can join the growing ranks of Baby Steps Millionaires. The secret lies in taking control of your finances. It’s about proactively directing your money rather than wondering where it disappeared. This requires a well-defined financial plan and intentionality in your financial decisions.
What concrete steps can you take to become a millionaire? Here are some essential actions to implement today:
- Invest early and consistently: Start investing as soon as possible and maintain a consistent investment strategy over time.
- Increase your income: Explore opportunities to boost your earning potential through skill development, career advancement, or side hustles.
- Keep your millionaire goal front and center: Regularly visualize and reaffirm your financial goals to stay motivated and focused on your wealth-building journey.
Take Your Next Steps Towards Millionaire Status
To further guide you on your path to wealth accumulation, consider these resources:
- Explore The National Study of Millionaires: Gain deeper insights into the habits and attitudes that contribute to the financial success of millionaires.
- Read Baby Steps Millionaires by Dave Ramsey: Learn from the experiences of individuals who have achieved millionaire status using the Baby Steps framework.
- Connect with a SmartVestor Pro: Find a qualified financial advisor who can provide personalized guidance and support for your investment decisions.
Find a Financial Advisor
Frequently Asked Questions About Millionaires
What exactly defines a millionaire?
A millionaire is simply defined as anyone with a net worth of $1 million or more. When your assets (what you own) minus your liabilities (what you owe) totals over a million dollars, you are classified as a millionaire. Contrary to popular misconceptions, becoming a millionaire isn’t about annual income, leveraging rental properties, or anecdotal opinions.
It’s a straightforward definition, but let’s address some common myths surrounding millionaires.
Don’t most millionaires live extravagant lifestyles?
Here’s a revealing secret: just because someone appears to be a millionaire doesn’t necessarily mean they are. Contrary to the media portrayal of millionaires, the majority resemble your average neighbor more than a celebrity or athlete.
In fact, The National Study of Millionaires revealed that the top car brands driven by millionaires are not luxury brands. Toyota and Honda are the most popular makes among millionaires, with nearly one-third (31%) driving one of these brands.
Do millionaires splurge on designer brands and gourmet dining? Not typically. Millionaires in the Ramsey Solutions study reported spending an average of $117 per month on clothing and less than $200 per month at restaurants. ^12^
Becoming a millionaire is fundamentally about your financial behavior and priorities, not about keeping up with trends or societal expectations. If your goal is to build wealth and become a Baby Steps Millionaire, focus on your financial goals, disregard external pressures, and “live like no one else so that later you can live and give like no one else.”
How do millionaires achieve rapid wealth accumulation?
Contrary to popular belief, most millionaires do not get rich quickly. Individuals who chase “get-rich-quick” schemes like single stocks, cryptocurrency, or speculative real estate ventures often encounter disappointment and financial setbacks.
So, what is the primary method millionaires use to build wealth? The answer is surprisingly simple and consistent: long-term, consistent investing in retirement plans. ^11^ The majority of millionaires utilize 401(k)s and IRAs to accumulate their wealth.
While it may not be a glamorous or exciting approach, it’s a proven and reliable strategy. By consistently investing 15% of your gross income into tax-advantaged retirement accounts over 25, 30, or 40 years, you will become a millionaire!
Disclaimer: This article provides general financial guidelines. Individual financial situations may vary. Consult with a qualified financial advisor for personalized advice. Ramsey Solutions is a paid promoter of SmartVestor Pros.
