While it makes sense that time is a crucial ingredient in accruing savings and assets, the average age of millionaires in the US has been rising faster than the average age of the overall population over the past three decades.
It's the age of geriatric millionaires, and it might point to overlapping issues: Younger workers can't amass wealth at the same rate they used to, and increasingly the way to ascend to the ranks of the wealthy is to receive inheritances.
"Multigenerational wealth is doing fine, but first-generation people who are not on the wealth train are having a harder time getting on," Chuck Collins, the director of the program on inequality and a co-editor of Inequality.org at the left-leaning Institute for Policy Studies, told Business Insider.
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That's bad news for the American dream of hitting it big as a self-made entrepreneur. Forbes said a third of the people on its latest billionaires list inherited all or most of their wealth; in its 2001 ranking, just five out of the 490 ranked billionaires were listed as having inherited their wealth. In many cases, those people are inheriting that wealth much later in life.
"The millionaires are aging, and they're not passing that wealth down the generational line, or they're passing it on much later in life," Collins said. "Even the recipients are old."
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 mean even more power is wielded by a cohort that might not be here to see how it plays out.
How millionaires are changing
Since 1992, the average age of the country's millionaires has been going up. We looked at Survey of Consumer Finances data for Americans with a net worth of $1 million or more in 2022 dollars and compared their demographics in 2022 — the most recent year we have data for — and 1992.
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In 1992, the average millionaire was about 57. By 2022, the average millionaire was about 61. That means younger people aren't joining their ranks fast enough to keep the average age steady.
Some of that can be chalked up to aging populations. After all, the US has been getting older, and geriatric Americans hold more power than ever before. To parse how millionaires stack up with the rest of the population, we looked at age breakdowns in both 1992 and 2022.
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Here's what the general population and millionaires looked like in 1992. Millionaires are overrepresented beginning at about age 50 but track pretty cleanly with the cohort in their 40s.
Millionaires were more overrepresented in the 60-plus cohort in 2022.
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In addition to millionaires with net worths of more than $1 million, Americans who make an annual salary of $1 million are skewing older.
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 over reported earning over $1 million; by 2021, that had nearly quadrupled, with just under 218,500 Americans 65 and older earning over $1 million.
"We are collecting a good portion of our tax revenue from these folks — the older folks who typically are higher income or higher net worth who tend to have higher incomes — which is good; that obviously underscores the progressivity of the system," Watson said. "At the same time, we do have a lot of provisions in our fiscal system that benefit these folks."
What does it mean to have so many older millionaires?
That doesn't mean the picture is completely bleak for younger Americans. Pandemic stimulus, coupled with an unprecedented labor market and real-estate and stock gains, enabled millennials across the income spectrum to double their wealth from 2019 to 2023.
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Business Insider's analysis indicates 9.8% of millionaires are 35 to 44. That's a respectable chunk of 30-somethings and 40-somethings who can claim millionaire status. Meanwhile, about 19% of millionaires are 45 to 54.
Still, the average net worth for millennials sat at about $128,000 in 2022, compared with about $1.2 million for baby boomers in 2019. And many millennials don't feel financially secure amid high housing costs and student-loan debt loads.
Gen Xers are dealing with their own economic precarity. They tend to hold the most liabilities of any generation and spend the most on housing and shelter. Gen Xers are also the first generation to contend with overlapping retirement crises, as they've been left to pick up the bill for their retirement years and might face reduced Social Security. Both generations have dealt with wages that haven't kept pace with productivity.
The growing accumulation of wealth in older hands affects consumer spending, employment, housing, and more.
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The boomer generation held half of the combined net worth in the US and was behind 22% of all spending in 2022, the Labor Department's September survey of consumer expenditures found.
That's propped up consumer spending, even as the savings rate has dropped and inflation has remained stubbornly high. It's also affected the labor market, with jobs that cater to boomers taking off.
"Thanks to all the retired and retiring seniors, spending on air transportation, hotels & motels, food, and health care services all have been soaring to new or near record highs," the veteran market strategist Ed Yardeni wrote earlier this year. "That's because seniors are traveling more, dining out more, and visiting their health care providers more. As a result, payroll employment in all these industries continues to rise to record highs."
Boomers aren't just living it up on vacation. They're holding on to some of their largest and most valuable assets: big homes.
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A growing number of baby boomers are keeping their large homes for longer, constraining the supply available for younger families. An analysis of US census data by Redfin found that 28% of homes across the US with three or more bedrooms were owned by empty nesters between 60 and 78 in 2022. That was double the percentage of millennials with children who owned similarly sized homes.
Lastly, the age of geriatric millionaires could create what Collins at the Institute for Policy Studies called the "King Charles effect," referring to King Charles III, who ascended the throne at 73.
"Instead of 60-year-olds giving to 30-year-olds, it's going to be 90-year-olds giving to 60-year-olds — meaning that because these wealthy folks are holding on to wealth longer, that intergenerational wealth transfer that we've all heard about is later in life for a lot of people," Collins said.
"It's very different to inherit a couple million dollars when you're in your 20s than it is in your 60s. You've already made a lot of decisions in your life."
