It’s difficult to argue with the habits of Millionaires Next Door. (Here’s a spoiler - being a PAW means you’re among the top 25% of net worth accumulators!) Her net worth is a little over two times the threshold, so she is a PAW. She has a net worth of $700,000, counting her savings, home equity, and business value. The formula for calculating what type of accumulator you are is easy: He shortens these three categories into acronyms - PAW, AAW and UAW. In “The Millionaire Next Door,” Stanley talks about Prodigious, Average and Under Accumulators of Wealth. How important is it to you to join the ranks of millionaires one day? Are you aiming for those two commas, or are you planning to hit the $500,000 happy retiree benchmark? And where are you on your quest for financial freedom? Once you do, most capital gains tax is 15%, based on current tax law, or less than half of the wage tax! On the other hand, stocks are subject to zero tax (even as they grow in value) until you choose to sell. Our nation’s highest earners pay over 40% of their income to taxes. 1 highest-taxed dollar is one you earn as a wage. Members of the millionaire club make their assets work for them. The answer is: not as deep as you would think. One big question is how deep Uncle Sam reaches his hands into millionaires’ pockets. That amount of attention should keep you on track for your wealth journey. Personally, I recommend committing to sitting down and digging into the numbers once a month. They aren’t budget hawks that would spoil some of the fun and make wealth-building a laborious job! But they do keep track of where their money goes. They spend the time watching the outflow. One key theme from all of the data and figures is that millionaires live their lives below their means. Explore Wes Moss: What to avoid if you want a happy retirement Add in significant home equity, and we’re talking considerable net worth. They believe “smart investing” is a key to their success and hold about half of their investable assets in stocks. And about two-thirds rely on the help of a financial planner to manage their wealth. Millionaires save an average of about 25% of their income. Still, they made it, and they did so by prioritizing saving and investing. In fact, 80% of current millionaires didn’t hit the net worth mark until they were at least 50 years old. Studies show leveling up to the seven-figure mark takes time - on average, 32 years. These folks are likely to have a college degree, still be in their first marriage, and clock 50-plus hours a week on the job, with over half owning a business.Īs for wealth accumulation, let’s take another look at those Millionaire Statistics from. What are some of the characteristics of the rich and not-so-famous, according to Stanley’s book? Most of our friendly millionaire neighbors started in low- to middle-income families and were first-generation millionaires.
According to the same folks, the median wealth of Americans is $65,904, which makes $1 million about 1,500% of the median.
The data indicates that about 14% of households in the U.S. I found an interesting site called, which pulls statistics from places like Fidelity Research, Spectrem and others to gather Millionaire Statistics. Let’s move on to the rare birds among us who aren’t as rare as we think. And the third is to have at least half a million in liquid assets. Secondly, have at least three income streams, such as Social Security benefits, pensions, real estate income, and retirement income.
The first is to pay your mortgage off before you retire. These three simple things can help you work toward “richness,” too.
And, from my professional experience, it very much is.īefore we dive into joining this tribe, remember, based upon the research from my book, “ You Can Retire Sooner Than You Think,” three of the top financial goals for retiring happier - and sooner. What’s most powerful about Stanley’s book is that it demonstrates how becoming a member of the millionaire club can be a reasonable goal for everyday Americans.