How many US retirees actually have $1M or more in investments (when their homes are excluded)?

Reading the nation’s wealthiness statistic tin spark fiscal anxiety. After all, header statistic suggest that being a millionaire successful America is comparatively common.

More than 24 cardinal households crossed the U.S. person a nett worthy greater than $1 million, according to Bloomberg. (1) That’s much than 18% of each households. (2)

On the surface, it looks similar 1 successful 5 households is thriving and could discontinue whenever they like. However, excavation deeper, and you observe wherefore truthful galore families are struggling financially, adjacent if they’re officially successful the seven-figure club.

Real fiscal information isn’t astir however overmuch you ain connected paper, but however easy you tin entree wealth erstwhile you request it.

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Liquidity — oregon your quality to easy bargain oregon merchantability an plus — is simply a cardinal constituent of wealth.

For instance, if you person $1 cardinal but astir each of it is trapped successful an plus that is hard and costly to sell, you’re lone truly a millionaire connected paper. This is not an plus you tin trust connected during a abrupt exigency oregon confidently estimation the nett summation aft taxes and expenses.

By comparison, if you person $1 cardinal invested successful an plus that you tin offload successful a azygous time and wage minimal taxes and transaction costs, that wealth astir apt feels much similar genuine wealth.

Unfortunately, overmuch of U.S. household wealthiness is trapped successful a comparatively illiquid asset: the household home. For galore mean families, homeownership is synonymous with the ‘American dream,’ which is wherefore overmuch of their savings and investments are dedicated to gathering location equity.

This spot obsession tin mean different assets get neglected. As of 2021, the median household nett worthy excluding location equity was conscionable $57,900, according to Pew Research. (3)

Not lone is that importantly little than the seven-figure threshold. It’s besides obscurity adjacent capable for a comfy retirement.

While it is technically imaginable to pat into your location equity successful retirement, possibly by downsizing oregon utilizing location equity loans, determination are applicable limitations to these approaches. After all, you inactive request a spot to unrecorded if you merchantability the household home.

With this successful mind, British consulting steadfast Henley & Partners uses a net-worth measurement that excludes the worth of a household’s superior residence.