Today's millionaires are young and self-made (2024)

Today's millionaires look substantially different from those of yesteryear.

Instead of espousing the classic look of old money or reaching financial success later in life, the millionaires of 2023 are younger and far more likely to be self-made than in decades past.

The Federal Reserve found that the average net worth of American families finally passed $1 million for the first time, growing 42 percent from $749,000 in 2019. Even accounting for inflation, real average wealth shot up 23 percent in the last three years, according to the Fed's Survey of Consumer Finances. And the median wealth level also rose 37 percent to $193,000.

Just over 12 percent of American families, roughly 16 million, have more than $1 million in wealth. That's a stark increase from 2019, when only 9.8 million families held that status.

While the average number is deeply affected by the small number of billionaires and millionaires, the growth signals how many Americans have been able to reach millionaire status through a variety of factors, from schooling to investments, in a way distinctly different from the past.

Mary Eschelbach Hansen, an economics professor at American University, said the changing wealth reflects the continued value of a college degree, as investment returns on college costs are estimated at between 13 percent and 36 percent.

"Even though tuition costs had been rising before the pandemic, college is a good investment," Hansen told Newsweek. "Plus, it's most often jobs that require a college degree that come with key employee benefits that build wealth, such as an employer match for retirement savings, and protect wealth, such as health insurance."

College was a top predictor of future millionaire status, disproving the typical college dropout millionaire myth.

"It confirms that if a person gets a college education, a stable well-paying job and follows time-tested strategies of investing in stocks, buying a home and paying down debts, then they are well on their way to eventually becoming a millionaire," Ajay Singh, the managing director of RetireBetter, told Newsweek.

Depending on where they live, the new group of millionaires is considered upper middle class and brings in between $150,000 and $250,000 a year. These families in the 80th to 90th percentile of income distribution saw the highest wealth gains between 2019 and 2022, surging 69 percent from 2019, adjusted for inflation.

What's driving the wealth increase?

Investments, college degrees and upward career mobility are key factors, according to the Fed survey. More than 90 percent of families reported owning stocks directly or through their retirement accounts, and 87 percent owned their own home.

And younger millionaires are at the front of the wealth-building movement, with more than 600,000 millennial millionaires reported in the U.S., according to CNBC. The number of millennial and Gen Z millionaires also doubled in 2022, according to Bowmore Wealth Group research.

The surge of wealth is not predicated by a transfer of wealth from family members, either.

A 2021 survey of millionaires by Ramsey Solutions showed only 3 percent of respondents inherited more than a million dollars from their parents, and 79 percent had no inheritance at all.

But younger millionaires are more likely to take advantage of today's trends to boost their wealth, Michelle Delker, a finance expert and founder of The William Stanley CFO Group, told Newsweek.

"Today's new wave of millionaires are shaking things up, investing more in crypto and stocks and making their money work smarter," Delker told Newsweek.

With the rise of influencers, the younger generation is turning their social media knowledge into real money and becoming millionaires at a much earlier age than before.

"Because the money is more easily accessible, they are investing aggressively, living frugally, and using technology to stay on top of their finances," Delker said.

Debt payments were also slashed from 19 percent of income in 2007 to 12.9 percent in 2022, as a result of lower interest rates. And college tuition forgiveness programs are helping younger workers grow their wealth earlier.

"For those with student loan debt, the college tuition forgiveness programs have opened up opportunities that they didn't have before," Delker said.

Millennials and Gen Z are also more likely to adopt a "hustle" culture, finding side jobs to supplement their full-time income. Roughly 86 percent, or 44 million Americans, reported having a side hustle, a 2017 Bankrate survey found.

They also are more financially literate, choosing to start saving earlier and looking out for lucrative investment opportunities in their 20s and younger instead of waiting until their 30s.

Due to this, the growing number of young millionaires might be proving the old American dream to be true, experts say.

"The growth of young millionaires in the U.S. over the past few years is a sign of the country's economic resilience," Aron Alexander, CEO and founder of payments company Runa, told Newsweek. "There are just more opportunities for people to achieve financial success than anywhere else in the world, even at a young age.

The tech industry has also offered many opportunities for entrepreneurship and startup growth as AI becomes increasingly influential, Alexander said.

Still, a growing number of millionaires do not feel confident about their wealth moving forward as inflation remains high.

"Many of these young millionaires' wealth gains remain fragile and have been wiped out over the last year due to rising interest rates, inflation and lower stock market," Alexander said.

For small businesses and entrepreneurs, business debt servicing costs have increased, lowering take-home pay and investment opportunities.

And a majority of Americans earning more than $100,000 still live paycheck to paycheck, with most wealthy people expecting their financial situation to deteriorate moving into 2024, according to Forbes.

Financial divide in America

While the middle class used to comprise the majority of Americans, a growing upper middle class shows there might be a greater divide in terms of the economic realities for Americans at the top and bottom of the wealth spectrum.

Today's millionaires are still mostly older, with only 1 percent of families under 35 reaching that financial status, but it's becoming easier to reach the millionaire title over time and at a younger age.

At ages 55 to 64, 21 percent of families are millionaires, and the trend becomes more pronounced for college graduates. Among this group, 45 percent are millionaires by age 55 to 64, and 26 percent of families become multimillionaires.

The average college graduate's net worth is more than $2 million.