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Millionaires tend to have a different view of wealth and retirement savings than other Americans do.
It may seem surprising, but most millionaires don’t consider themselves wealthy, according to an Ameriprise Financial survey. In fact, 60% consider themselves upper middle class, and 31% say they are part of the middle class.
The survey, which included 580 Americans ages 27 to 77 with $1 million or more in investable assets, also found that millionaires’ financial priorities differ from less affluent investors’ priorities. Millionaires’ priorities were:
Ameriprise also surveyed those with less than $1 million in assets. Their top financial priorities were:
“More affluent investors are more interested in protecting what they have. Thus they are more risk-averse and tend to be more cautious with their decisions around money,” Kimberly Maez, private wealth advisor at Ameriprise in Englewood, Colorado, said in an email.
Affluent investors are also concerned about passing on their values about money to their families.
“Sometimes they are more concerned about transferring their money values more than their wealth itself,” Maez added. “They understand that quality of life can be drastically better if someone’s relationship with money is healthy. Money happiness tends to correlate with a more productive, content life.”
“The millionaires I’ve worked with over the years seem to have a common trait of patience,” Zach Green, a certified financial planner at Wealth Enhancement Group in Plymouth, Minnesota, said in an email.
Green added that his millionaire clients have what amounts to a philosophical approach to life.
“They think long term and understand that life and success across various disciplines – financial but also health, relationships, golf skill – don’t tend to follow a linear path,” he said.
“They also focus on what they can control and respect and anticipate the impact of the things that can’t be controlled,” Green said. “They have plans in place should catastrophe strike, and they tend to focus on what brings them joy.”
With 91% of millionaires in Ameriprise’s survey describing themselves as middle or upper-middle class, today’s criteria for what is wealthy appear to be different from those of the past.
“While being a millionaire used to signify wealth 50 years ago, the definition has evolved. In today’s terms, it places you firmly in the middle class depending on your location,” Tammy Trenta, founder and CEO of Family Financial in Manhattan Beach, California, said in an email.
In recent decades, factors such as lifestyle, inflation and regional cost disparities have influenced the perception of what being wealthy entails.
Today, wealth often encompasses broader financial literacy, multiple income streams and achieving a comfortable, sustainable lifestyle, rather than just net worth.
“As it relates to wealth, one size doesn’t fit all,” Maez said.
“No matter how much wealth we have, we don’t think of ourselves as being ‘wealthy,'” she added.
For millionaires, balancing risk and reward by diversifying across asset classes is a way to preserve capital while also growing wealth. A well-crafted investment portfolio accomplishes those goals while also protecting against inevitable market fluctuations.
While typical portfolio holdings include stocks, bonds and alternatives such as commodities and liquid real estate, many high-net-worth individuals and families also invest in business ventures and physical real estate.
“Millionaires are primarily focused on accumulating wealth. They may not feel financially independent yet, but they are diligently saving and aiming for that goal,” Trenta said.
For aspiring millionaires, Trenta advised starting to invest as soon as possible.
“With dedication, commitment and patience, it typically takes about 10 years to reach a point where your money truly begins substantially working for you,” she said. “In my experience, the initial 10 years are the toughest but also the most critical.”
It’s not always easy to think beyond the current situation, but taking a longer-term approach is crucial to developing a millionaire mindset.
Green offers a nautical metaphor for those hoping to grow their net worth. “Keep the periscope high. Imagine you are the captain of a military submarine,” he said. “You want to take a peek topside and look toward the horizon.”
The higher the pericope, he said, the farther out you’ll see.
Investors who take into account emergencies and curveballs down the road are generally better prepared to cover surprise costs without draining their savings or investment accounts.
“If you wait until an obstacle falls in your lap and if you’ve not anticipated it, you are more likely to act out of emotion and risk throwing yourself off your path to the desired future,” Green said.
Planning to be a millionaire also involves having clear financial goals. That involves developing a regular habit of investing and saving and having a clear vision of what large expenses you’ll incur. Those may include college, a new vehicle, a new home, health care expenses and travel. None of those expenses should be surprises, but many pre-retirees fail to plan.
“Written goals are the No. 1 driver of wealth over time,” Maez said.
She suggested writing down what you hope to accomplish and then budgeting for that, living on less than you make.
“Finding a trusted money mentor can also make a big difference,” she added. “Tapping into someone else’s wisdom, life experience or expertise can help you identify blind spots or can just give you a little edge on how to build resources with the least amount of friction possible.”