A new generation of millionaires and billionaires probably owe as much to inheritances as to self-made fortunes.
The rich are getting richer, and younger.
A survey of U.S. investors with $25 million or more finds their average age dropped by 11 years since 2014, to 47. These fabulously rich Americans, whose ranks have more than doubled since the depths of the Great Recession, are younger than less wealthy millionaires. The average age of those with at least a mere $1 million is 62, a number that hasn’t budged in years.
The finding suggests a “vast generational transfer of wealth” is “just beginning,” said George Walper Jr., president of the Spectrem Group, which conducted the study. The sample size was small — 185 Americans with more than $25 million in net worth — but the findings are consistent with other economic research on the top 0.1 percent.
Those over 65 hold more than a third of U.S. wealth, a number that hasn’t risen as quickly as the share of elderly Americans in the population, University of California Berkeley economists Emmanuel Saez and Gabriel Zucman found in a 2016 paper. In fact the very wealthiest group of Americans “is actually getting younger.”
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Where is this new money coming from? A new generation of millionaires and billionaires probably owe as much to inheritances as to self-made fortunes. “There may be more Mark Zuckerbergs at the top of the wealth distribution than in the 1960s, but also more Paris Hiltons,” Saez and Zucman wrote.
About 172,000 U.S. households have a net worth of at least $25 million, Spectrem estimated last year. That’s up from 84,000 in 2008.
About nine in 10 investors under 38 attributed their success to “inheritance” and “family connections” in the Spectrem survey. But the same proportion also said “hard work” and “running my own business” played a role. About 70 percent of the richest investors said they’re still working.
Even as more young people entered the top 0.1 percent, most of their Millennial and Generation X compatriots were struggling. Americans 75 and older are the only age group whose median net worth rose from 2007 to 2016, according to the Federal Reserve Survey of Consumer Finances released in July 2018. Typical Americans age 35 to 54 saw their wealth — heavily concentrated in housing — plunge by more than 41 percent in that time frame.
Meanwhile, the richest Americans are using complex estate-planning techniques to transfer wealth to their children, grandchildren and beyond. Ninety-one percent of investors with $25 million or more keep assets in a trust, Spectrem found, and half have three or more trusts set up.
Charity is getting less attention. Although nearly 200 of the world’s richest people have signed the Giving Pledge, the Spectrem survey suggests the typical rich person is much less generous, at least so far. Of respondents with at least $25 million, just 15 percent give away $100,000 or more annually.