The report — which tracks the number of affluent American households based on net worth from the mass affluent, with at least $100,000, to the $25 million-plus segment — finds the number of wealthy U.S. households reached a new high for the 10th consecutive year.
Increasing 2.5% in 2018, the number of U.S. households with a net worth between $1 million and $5 million, not including primary residence, now stands at 10.23 million.
Similar increases were also recorded in all other wealth segments measured.
The mass affluent population, with a net worth between $100,000 and $1 million, grew by 200,000 households during 2018 to 31.2 million households.
The ultra-high net worth market, in which net worth is between $5 million and $25 million, grew to 1.397 million households, an increase of 47,000 from 2017.
In the $25 million-plus segment, there are now 173,000 households, an increase of 1,000 households from the previous year. Comparatively, in the 2018 Market Insights report, there was an increase of 16,000 households with a net worth exceeding $25 million, so the 2019 report shows the growth in that wealth segment slowed considerably.
According to Spectrem Group President George Walper Jr., the increase in the number of U.S. wealthy households slowed in 2018 as a result of weakening global economic growth and a contentious U.S. political environment.
“While net household wealth among affluent investors continued to increase last year, it did not match the pace it had experienced in prior years. Despite this, the total number of households in the upper wealth segments in the United States has nearly doubled since the onset of the global financial crisis in 2008,” Walper said in a statement.
The report also examines the age demographics of these wealth segments.
Baby boomers comprise the largest percentage of mass affluent (57%), millionaire (67%) and ultra-high net worth (67%) investors. However, millennials make up the largest share of $25 million-plus investors, 47%.
Net worth does not vary significantly by age among mass affluent, millionaire and ultra-high net worth investors.
However, the youngest $25 million-plus investors have a significantly higher net worth than their older counterparts. The average net worth for millennials in the $25 million-plus segment is $164 million, with Gen Xers in this segment close behind with $160 million average net worth. Baby boomers in this segment, however, average $85.6 million net worth.
When Health Affects Wealth
Millionaire investors today worry more about paying for health care services and taxes than running out of money, according to the report. Even despite millionaires’ younger age, their top personal concerns still revolve around health issues.
Most investors anticipate funding excessive medical expenses from their savings and investments.
Asked their anticipated method for funding health care expenses, the top answer was distributions from savings and investments, with 32% of retired respondents and 28% of working respondents saying this. The next anticipated method is Medicare, with 29% of retired respondents and 25% of working respondents saying this.
The report finds that about 30% of investors have no knowledge regarding the cost of extended care. Less than a third have long-term care insurance. Those that own long-term care insurance are most likely to do so because they fear becoming a burden to their children, according to the report.
Over a third of wealthy investors do not own any insurance products outside of employee-provided policies.
Investors will be primarily relying on their children to assist with future healthcare and living arrangements. Working investors are almost as likely to look to their financial advisor for assistance.
The information in Spectrem Group’s report is obtained primarily from monthly online research it conducts with investors of all wealth segments. Each year, Spectrem interviews more than 2,300 mass affluent investors, 4,450 millionaire households and 1,850 ultra-high net worth investors. This year, Spectrem also interviewed 185 investors with $25 million or more in net worth. Net worth does not include primary residence.
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