“In America, people don’t like to think of themselves like being in a lower class. They all like to think of themselves as potential millionaires.”
– Matt Taibbi

Happy Senior Couple on a Sail BoatIf you’ve been listening to the presidential candidates or reading the negative daily news headlines, you might think that the whole world is struggling to make ends meet, except for a few favored “elites.” But in truth, more and more households are crossing into millionaire territory each year than the year before, as defined by net worth.

In this article, we’ll answer some millionaire trivia questions, such as,

  • How many total millionaires are there in the world today?
  • Which countries around the world have the most millionaires?
  • Which countries are adding (and losing) new millionaire households at the fastest rate?
  • What country leads the world in average net worth?

Most importantly, we’ll look at why a million dollars is really just a starting point, and how millionaires can maximize their cash flow, which is the real measure of wealth! And to take a deep dive into wealth management, read our Ultimate Guide to Financial Planning Myths.

Millions of Millionaires 

According to the 6th annual Credit Suisse Global Wealth Index released the end of 2015, measured in dollar terms, there are 33.7 million households worldwide with $1 million or more in total net worth. This represents a substantial 146% increase since 2000.

What country has the most millionaire households? The United States is home to the most millionaires by far, with nearly 7 times more million-or-more-net-worth households than the next country on the list. More than 46% of these million-dollar households are located in the U.S., or 15.7 million households overall. The United Kingdom and Japan are far behind on the list, with 7% (2.3 million households) and 6.3% (2.1 million) shares of millionaire households respectively.  They are closely followed by France and Germany (5%; 1.5 million) and China (4%; 1.3 million).

Where in the world are the millionaires? The chart below shows you exactly where they are!

Millionaires-where-they-live-graphic

Net worth winners and losers. The trends are positive for the U.S., which saw 900,000 new households reach the millionaire club in the past year, an increase of about 6%. China added 150,000, a whopping increase of 13%, percentage-wise.  However, this trend is more representative of “catching up” than pulling ahead. North America represents only 6% of the population with currently a 37% share of the world’s wealth (measured in U.S. dollars). China, despite enormous gains this century, accounts for 21% of the adult population of the world, yet only 9% of global wealth.

But not every country’s citizens are still experiencing gains in net worth. Japan had 680,000 households fall out of millionaire status, representing a more than 4% loss. Overall, Europe was the part of the world that lost the most members of the club, shedding 2 million, primarily from France, Germany, Italy and Sweden. The United Kingdom was the exception in Europe, posting small gains in household net worth from 2014 to 2015.

Which countries are left out of the millionaire club?  All of Africa and India combined make up just 1.3% of the total millionaire households.

Which country has the highest average net worth? In spite of Switzerland’s average household worth falling by USD $24,800 to USD $567k in 2015, Switzerland still remains the country with the highest average net worth, and the only country where wealth per adult has exceeded USD $500,000. In spite of the United States leading the world with household millionaires, the U.S. ranks fourth place with average net worths of $353k per adult. The global average net worth figure (for all countries combined) is $52,400 per adult (measured in U.S. dollars).

“A Million Dollars Ain’t What it Used to Be!”

Perhaps the most interesting insight from the survey is the fact that having a million dollars in assets is no longer an exclusive club.  And it’s becoming less so.  Credit Suisse estimates that the number of millionaires will grow more than 35% over the next ten years.

While part of that trend is mere inflation – a million dollars truly isn’t what it used to be, as we see more dollars chasing the same goods and services – the trend also represents the entrepreneurial and technological growth we see in some corners of the world.

For the younger millennial generation, one million is hardly the goal. According to a recent UBS Wealth Management survey of 2,215 U.S. investors with more than $1 million in net worth, baby boomers consider $5 million dollars wealthy, while Millennials feel more pressure of competition and lifestyle, and tend to consider $10 million dollars or more the goal.

With ever-increasing inflation and longevity, it is appropriate to aim higher than a million dollars. And for the younger generation, it is almost a necessity, as they will need more money to sustain their lifestyles longer. But there is another dynamic at play here. Millennials are most likely to say they feel pressure to “keep up with the Joneses.” This sense of competition manifests in their career decisions and personal behavior. For example, Millennials are more likely to feel pressure to work long hours (49% of Millennials vs. 28% of Boomers). Three-quarters of Millennials have checked online for their peers’ salary, career history, home price or purchases (74% for Millennials vs. 57% for Boomers).

Net Worth Rich, Cash Flow Poor

Another way that “a million dollars ain’t what it used to be” is the fact that record low interest rates have made it very difficult to live off of interest alone. If you can find a bank paying one percent interest, your one million dollars of savings will produce a mere $10,000 in income… taxable!

If you’re willing to consume some principal, it doesn’t get much better. Interest rates and market uncertainties have turned “the 4% rule” into “the 3% rule,” which gives a millionaire retiree only $30k per year (taxable). Some people opt for actively managed funds or even target-date funds, but the risks can outweigh the benefits when the market goes south.

It’s easy to see why a couple who wishes to stop working in their 60’s had best have multiple millions in their portfolio. Even then, two or three million dollars won’t support a lavish lifestyle. But perhaps there are better solutions to the too-typical “accumulate and then disburse” model….

How to Stretch a Million Dollars Further

Cash value in a life insurance policy is currently paying about 3 – 4.5% with a participating (dividend-paying) mutual company, depending on the age and health of the insured. While this is still a safe and conservative rate of return, life insurance has a few advantages over stocks, bonds, and most other accumulation vehicles.

First, the cash value growth and dividends can create a “new floor” for the policyholder, if withdrawals are not made. Cash value does not roller-coaster ride with the markets, and historically, it pays a couple of percentage points (or more) above bank rates. (Listen to this Prosperity Podcast episode for details on dividends.)

Secondly, cash value insurance can be leveraged by experienced investors who need capital for more lucrative opportunities, not to mention emergencies! Find out how this can increase your investment returns in our article, “The Power of Liquidity.”

And lastly, whole life insurance also has a growing death benefit that can be taken into account. There are creative strategies to help policyowners benefit from their death benefit – without dying first! (Listen to Prosperity Podcast episode #89 for details, or read Kim Butler’s Live Your Life Insurance book.)

Investors who actively participate in real estate, business ventures, peer lending and other activities can often fare well, generating 5%, 10%, and sometimes much more from their investments. However, not everyone wants to be an active investor!

For those who want consistent monthly checks without the hassle of managing an investment, we recommend investing in Bridge Loans or interim financing on commercial properties. Our bridge loan partners offer first deed mortgages as well as bridge loan funds (the latter for accredited investors only.) The rates are extremely competitive, beginning at 7% for first deeds of trust with options in the low double-digits for qualified investors. Contact us privately to learn more, or read “Bridge Loans and Hard Money: An Investment Opportunity?” for an understanding of how bridge loan investments work.

How Can We Help?

At Partners for Prosperity, Inc., we offer Prosperity Economics solutions rather than the “same old” typical financial planning strategies you’ve heard again and again (stocks and bonds…) To find out more about our work, we invite you to download our complimentary Prosperity Accelerator Pack, which includes an ebook, Financial Planning Has Failed, as well as a digital audio CD of Kim Butler’s “Seven Principles of Prosperity.” Sign up for instant access here.