Only 33% of millionaires consider themselves wealthy, report finds. Why it’s so hard to feel rich

Personal finance

The U.S. has experienced an unprecedented wealth boom. Yet, few Americans — including millionaires— feel confident about their financial standing.

Only 12% of Americans consider themselves wealthy, according to a new report by Edelman Financial Engines.

Despite their high net worth, just 33% of millionaires said the same, the report found. Edelman Financial Engines polled more than 3,000 adults over age 30 from June to July, including 1,500 affluent Americans with household assets between $500,000 and $3 million.

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To be sure, the rich are getting richer. The total net worth of the top 1%, defined as those with wealth over $11 million, increased by nearly $2 trillion to hit a record $46.2 trillion in the first quarter of 2024, according to data from the Federal Reserve, largely boosted by gains came from their stock holdings.

But beginning in 2020 with the Covid-19 pandemic run up in housing prices, wealth creation has been largely concentrated among homeowners, the Fed’s survey of consumer finances also shows.

“Homeownership doesn’t feel like wealth,” said Jean Chatzky, personal finance expert and CEO of HerMoney.com, who worked with Edelman Financial Engines on the report. “Homes are an asset that we use every day, it’s not like the balance in your retirement account or your savings account.”

At the same time, a prolonged period of high inflation also made practically everything more expensive and left less breathing room in household budgets.

Higher prices put households under pressure

The consumer price index, a key inflation measure that tracks average prices across a broad basket of consumer goods and services, increased 2.5% in August relative to a year earlier, according to the Bureau of Labor Statistics. That’s down from a pandemic-era peak of 9.1% in June 2022.

Even though inflation is now cooling, in most cases price increases are only slowing — not falling outright. To help make ends meet, data indicates, more people are relying on credit cards to cover day-to-day expenses.

Credit card debt is the biggest threat to building wealth

Americans now owe a record $1.14 trillion on their credit cards and the average balance per consumer stands at $6,329, up 4.8% year over year, according to the New York Fed and TransUnion, respectively.

More borrowers are carrying debt from month to month and a growing number are falling behind on their monthly credit card payments. Over the last year, roughly 9.1% of credit card balances transitioned into delinquency, the New York Fed reported for the second quarter of 2024.

Nearly half, 44%, of Americans said credit card debt is the biggest threat to their ability to build wealth, according to Edelman Financial Engines.

“Debt is, and has always been, a savings killer,” Chatzky said. “High-interest rate credit card debt, more than other sorts of debt, is a savings killer, because when you have it, you have to feed the beast. You can’t save, you can’t invest.

“That stands in the way of people building actual wealth and therefore feeling wealthier.”

How much money it would take to feel wealthy

Most people — roughly 65% of those polled — said they would need $1 million in the bank to consider themselves wealthy, although 28% said it would take at least $2 million and 19% put the bar at $5 million or more, Edelman Financial Engines found. Among millionaires, 68% said they would need at least $3 million and 40% said feeling wealthy would require $5 million of more.

When it comes to their salary, 58% of those surveyed said they would need to earn $100,000 on average to not worry about everyday living expenses, and a quarter said they would need to earn more than $200,000 to feel financially secure.

In most cases, feeling financially secure is not based on how much you earn, but rather a commitment to save more than you spend, maintain a well-diversified portfolio and work with a financial advisor, experts often say.

“Feeling wealthy can also be connected back to not having to worry about money,” said Isabel Barrow, the director of financial planning at Edelman Financial Engines. “It’s living within your means and not getting over your head in debt.”

Just one-third or 32%, of millionaires consider themselves wealthy and nearly half — 48% — believe that their financial plans need improvement, a separate planning and progress study by Northwestern Mutual also found. Northwestern Mutual polled more than 4,500 adults in January.

“For most Americans, ‘feeling like a million bucks’ is less about believing you’re rich and more about exuding confidence and clarity about the future,” said John Roberts, chief field officer at Northwestern Mutual.

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