Welcome to the age of geriatric millionaires

“Multi-generational wealth is doing fine, but first-generation people who are not on the wealth train are having a harder time getting on,” Chuck Collins, the director of the program on inequality and co-editor of inequality.org at the left-leaning Institute for Policy Studies, told Business Insider.

That’s bad news for the American dream of hitting it big as a self-made entrepreneur. According to Forbes, a third of the people on its latest billionaire list inherited all or most of their wealth; in its 2001 ranking, just five out of the 490 ranked billionaires were listed as having inherited their wealth. And in many cases, those individuals are inheriting that wealth much later in life.

“The millionaires are aging and they’re not passing that wealth down the generational line or they’re passing it on much later in life. Even the recipients are old,” Collins said said.

These forces are combining to concentrate an increasing share of wealth in the hands of America’s octogenarians. It could spell trouble for the economy — and see even more power wielded by a cohort that might not be here to see how it plays out.

How millionaires are changing

Since 1992, the average age of the country’s millionaires has been going up. We looked at Survey of Consumer Finances data for Americans with net worths of $1 million or over in 2022 dollars, and compared their demographics from 2022 — the most recent year we have data for — and 1992.

In 1992, the average millionaire was around 57 years old. By 2022, the average millionaire was around 61 years old. That means that younger millionaires aren’t joining their ranks fast enough to keep the average age steady.

Of course, some of that can be chalked up to aging populations. After all, the US has been getting older, and geriatric Americans are holding more power than ever before. So, to parse out how millionaires stack up to the rest of the population, we looked at age breakdowns in both 1992 and 2022.

Here’s what the general population — and millionaires — looked like in 1992. Millionaires are overrepresented beginning around age 50, but track pretty cleanly with the cohort in their 40’s.

Comparatively, millionaires were more overrepresented in the 60+ cohort as of 2022.

In addition to millionaires with net worths of more than $1 million, Americans who make an annual salary of $1 million are also skewing older.

Garrett Watson, a senior policy analyst at the Tax Foundation, analyzed IRS SOI data and found that in 2011, about 59,500 Americans 65 and over reported earning over $1 million; as of 2021, that’s nearly quadrupled, with just under 218,500 Americans 65 and older earning over $1 million.

“We are collecting a good portion of our tax revenue from these folks — the older folks who typically are higher income or higher net worth who tend to have higher incomes — which is good; that obviously underscores the progressivity of the system,” Watson said. “At the same time, we do have a lot of provisions in our fiscal system that benefit these folks.”

What does it mean to have so many older millionaires?

Of course, that doesn’t mean the picture is completely bleak for younger Americans. Pandemic stimulus, coupled with an unprecedented labor market, real estate, and stock gains, has meant that millennials across the income spectrum were able to double their wealth from 2019 to 2023.

According to our Business Insider’s analysis, 9.8% of millionaires are 35 to 44 years old. That’s a respectable chunk of 30-somethings and 40-somethings who can claim millionaire status. Meanwhile, around 19% of millionaires are 45 to 54 years old.

Still, the average net worth for millennials sits at around $128,000 compared to around $1.2 million for baby boomers, and many millennials do not feel financially secure amid high housing costs and student loan debt loads.

Gen Xers are dealing with their own economic precarity meanwhile. They hold the most liabilities out of any generation, and are spending the most on housing and shelter out of all cohorts. Gen Xers are also the first generation to contend with overlapping retirement crises, as they’ve been left to pick up the bill for their retirement years and might also face reduced Social Security. Both generations have dealt with wages that haven’t kept pace with productivity.

The growing accumulation of wealth in older hands impacts consumer spending, employment, housing, and more.

The boomer generation holds half of the combined net worth in the US, and was behind 22% of all spending in 2022, according to the Labor Department’s September survey of consumer expenditures.

That’s propped up consumer spending, even as the savings rate has dropped and inflation has remained stubbornly high. It’s also impacted the labor market, with jobs that cater to the boomers taking off.

“Thanks to all the retired and retiring seniors, spending on air transportation, hotels & motels, food, and health care services all have been soaring to new or near record highs,” veteran market strategist Ed Yardeni wrote earlier this year. “That’s because seniors are traveling more, dining out more, and visiting their health care providers more. As a result, payroll employment in all these industries continues to rise to record highs.”

And boomers aren’t just living it up on vacation. They’re also holding onto some of their largest and most valuable assets: Big homes.

A growing number of baby boomers are keeping their large homes for longer, constraining the supply available for younger families. Analysis of US Census data by Redfin found that 28% of homes across the US with three or more bedrooms are owned by empty nesters between 60 and 78 years old. That’s double the percentage of millennials with children who own similarly sized homes.

Lastly, the age of geriatric millionaires has the potential to create what Chuck Collins at the Institute for Policy Studies called the “King Charles effect,” referring to King Charles III of the United Kingdom, who ascended the throne at the age of 73.

“Instead of 60-year-olds giving to 30-year-olds, it’s going to be 90-year-olds giving to 60-year-olds — meaning that because these wealthy folks are holding onto wealth longer, that intergenerational wealth transfer that we’ve all heard about is later in life for a lot of people,” Collins said.

“It’s very different to inherit a couple million dollars when you’re in your twenties than it is in your sixties. You’ve already made a lot of decisions in your life.”