What Percentage of U.S. Citizens Have $5 Million?

The distribution of wealth across the United States is a topic of considerable public interest, often prompting questions about the financial standing of various segments of the population. Many individuals are curious about the prevalence of substantial wealth, such as a $5 million net worth, among American households. This article examines what wealth signifies and how it is measured, providing clarity on the financial milestones that define significant affluence.

Defining Wealth and Net Worth

Wealth, in personal finance, is commonly understood through the concept of net worth, which represents the total value of a household’s assets minus its total liabilities. Assets encompass all items of value owned, including both financial and non-financial holdings. Financial assets typically include cash, savings accounts, investment portfolios, and various retirement accounts such as 401(k)s and Individual Retirement Accounts (IRAs). Non-financial assets often comprise real estate, including a primary residence and any additional properties, vehicles, and equity in businesses.

Conversely, liabilities consist of all outstanding debts and financial obligations. These commonly include mortgages, home equity lines of credit, vehicle loans, student loans, and credit card balances. Therefore, a $5 million net worth indicates that a household’s collective assets, after accounting for all its debts, amount to this substantial figure.

The Percentage of U.S. Households with $5 Million or More

Achieving a net worth of $5 million represents a significant financial milestone, placing households in a highly exclusive group within the United States. According to data from 2023, approximately 4.8 million American households possessed a net worth exceeding $5 million. This figure translates to roughly 3.7% of all U.S. households.

The Federal Reserve’s Survey of Consumer Finances (SCF), conducted triennially, serves as the primary source for comprehensive data on household finances, including net worth. These surveys consistently show that a $5 million net worth is a threshold reached by a small fraction of the population. For context, to be in the top 1% of household net worth in 2023, a household needed a net worth of $13,666,778. The top 0.5% required over $20 million in net worth.

Common Pathways to Significant Wealth

Individuals typically accumulate substantial wealth through a combination of strategic financial practices and opportunities.

Entrepreneurship

One prevalent pathway involves successful entrepreneurship, where individuals build and scale businesses that generate significant income and asset appreciation. This often entails considerable risk, hard work, and innovation to create value in the marketplace.

Long-Term Investing

Another common method is long-term strategic investing, which includes consistent contributions to diversified portfolios of stocks, bonds, and real estate. Utilizing tax-advantaged accounts like 401(k)s and IRAs allows for tax-deferred growth, while investing in real estate can build equity and provide rental income over time. This approach leverages the power of compounding returns, where earnings generate further earnings, accelerating wealth accumulation.

High-Income Professions

High-income professions, combined with diligent saving and investing, also serve as a direct route to significant wealth. Professionals in fields such as medicine, law, finance, or technology, who consistently save a substantial portion of their earnings and invest wisely, can build considerable net worth over their careers.

Inheritance

Inheritance can play a role in wealth accumulation, as assets and estates are passed down through generations.

Understanding Wealth Distribution in the U.S.

The $5 million net worth figure exists within a broader landscape of significant wealth distribution disparities across the United States. While the average household net worth was approximately $1.06 million in 2023, the median net worth, which offers a more accurate representation of the typical household, was considerably lower at $192,084. This substantial difference between the average and median highlights the concentration of wealth among a smaller segment of the population.

Wealth inequality has become increasingly pronounced over several decades. As of 2024, the wealthiest 1% of U.S. households held 30.8% of the country’s total net worth. In stark contrast, the bottom 50% of American households collectively held only 2.8% of the total wealth in the same year.