Being a millionaire is overrated.
The term itself has quite a few connotations, including many that have been ingrained in us since we were children. Becoming a “millionaire” meant being set for life, and not having to worry about things like personal finances again. After all, millionaires are supposed to be destined for early retirement, right?
That was then, and this is now.
Time magazine recently estimated that for a millennial with 40 years until retirement, $1 million in savings is not likely sufficient. Taking into account 3% inflation over that time period, it would be worth just $306,000 in today’s dollars. That’s a pretty questionable nest egg for a millionaire.
How Much Is a Million Dollars?
The infographic from Carson Wealth shows that things have changed over time, and that a million dollars of wealth ain’t what it used to be.
Fun facts: The preferred car for millionaires is actually a Ford, and the majority of millionaires envision working all the way until their retirement.
In today’s world, reaching the magical “millionaire” mark of a $1 million net worth is less meaningful than it used to be. In fact, roughly 9% of households in the United States have “millionaires” living in them — this is a record amount, caused partially through the devaluation of currency over time.
That said, there are many cities, such as Vancouver, New York, London, Melbourne, and Tokyo, where even a million dollars isn’t even enough to purchase a home.
The “millionaire” case is a stark example of the erosion of a dollar’s purchasing power over time. To get a full sense, take a look at some historical numbers:
- To have the purchasing power of a millionaire from the 1900s, you would need at have nearly $30 million in today’s dollars.
- To have the same impact or influence on the economy as a millionaire from the 1900s, you’d need closer to $100 million in today’s dollars.
For more perspective on the topic, see how much money exists with this video from The Money Project:
Photo Credit: aisletwentytwo; Infographic: Visual Capitalist
$1 million worth of physical gold today will have the same purchasing power as a million dollars in cash 40 years from now.
Yes, if you are assuming the same 3% inflation rate assumed by the article. If the inflation rate is, say, double that, then a million bucks in gold today would have the same purchasing power as $2 million 40 years from now.
Perhaps a million isn’t the same now as in prior years, but do you know anyone who would turn it down? Like….”nah, I’d just as soon you NOT give me a million”. I don’t think so. And it was pretty significant to us when we reached a million some years back. Granted, we have pension and social security that we live on, and don’t need to use hardly any of the million for living expenses. But the way we have it invested does provide a very nice interest and dividend income to supplement the pensions. So, in our case, it should last the rest of our lifetime, simply because it is not the only resource we have.
I certainly wouldn’t turn it down, Kathy!
Until 2009, you could actually get a “risk free” return of around 5% on a million bucks — that’s $50,0000 annually. Not bad.
Unfortunately, those days — for the moment — are long gone.