Millionaire Survey

Meet America's millionaires

The American dream is alive and well

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Keeping up with the Joneses is as American as apple pie. So some good news: The American dream is still alive. Regardless of age, gender, economic level or political affiliation, a majority of wealthy households that took part in CNBC's first-ever Millionaire Survey believe that hard work will still lead to upward mobility and success in the U.S.

If you peeked into the Joneses' windows, though, the people living the good life might surprise you.

For all of the similarity in this group—overwhelmingly white, married and educated—the survey, conducted in the spring of 2014 by SpectremGroup for CNBC, reveals there are some dramatic differences among households with more than $1 million of investable assets.

So here is a look at the millionaires of today in America—how they got where they are, the kind of life it allows them to lead, how they plan to protect what they have gained, what they believe to be true about the American system of capitalism and what poses a threat to wealth in the future.

—CNBC.com staff
Posted 6 May 2014

A group aging well

Source: CNBC

Millionaires may have more modest incomes and lifestyles than you believe.

Three-fourths of America's millionaires are retired, and nearly 60 percent are grandparents with an income of less than $150,000 per year.

Just under a quarter of the millionaires surveyed had a household income of more than $200,000.

One clear finding from the study: Getting older may have its downside, but when it comes to wealth, being older is a key factor.

Thirty-eight percent of those with $1 million to $5 million are 70 or over, and that goes up to 40 percent for those with more than $5 million in investable assets. Those under 55 comprise 6 percent of households with $1 million to $5 million in assets; 3 percent of households have more than $5 million.

An elite class

Source: CNBC

With the price of a college education continuing to rise, many more Americans wonder whether the degree is worth it. You can pick your data point to make the pro argument.

This week the Federal Reserve Bank of San Francisco released a study suggesting that a college degree was more than the undereducated will ever be able to garner over a lifetime. You could also look at this survey, showing that 87 percent of millionaires have a college degree. More than half of millionaires also obtained some type of graduate degree.

Becoming a doctor only worked for 4 percent of millionaires—and that was before the Affordable Care Act.

Seventy-eight percent of millionaires believe the cause of income inequality is wealthier households having greater access to education.

Still, education isn't the No. 1 contributor to wealth creation.

What it takes

Source: CNBC

In fact, while education is a "significant" factor in obtaining assets, it ranks only fourth among the sources of wealth cited most often by millionaires—behind hard work, smart investing and savings.

Education was only one percentage point above frugality (9 percent) and two percentage points above family situations/inheritance (8 percent).

Why are Americans wealthy? Twenty-three percent of those surveyed cited hard work as the No. 1 reason, while 21 percent said smart investing and just 10 percent owed it to their education.

Overall views of wealth do vary based on political stripes, and speaking of the red state–blue state wealth divide.

State of the millionaire union

Source: CNBC

Despite the preconception that wealthy households tend to be Republican, the number of respondents that identified themselves as Republican was not significantly higher than Democrats or Independents. Thirty-eight percent indicated they were Republicans, while 30 percent were Democrats. Interestingly, 29 percent said they were Independents, making them an interesting segment to watch as both voters and donors in upcoming elections.

Political affiliation did cause some of the more striking divergences in millionaire mind-set.

Democrats are more likely to believe that the place or family you are born into, or other circumstances beyond your control, determine wealth (45 percent), while only 21 percent of Democrats believe hard work will lead to wealth. Conversely, 63 percent of Republicans attribute wealth to hard work, and only 12 percent believe it is the place of family you are born into. Independents are more likely to believe hard work leads to wealth (40 percent) than the family or circumstances you are born into.


A moderately bullish leaning among the wealthy

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Over half of millionaire investors believe the S&P 500 will be up 5 percent to 10 percent by the end of the year. Sixteen percent of investors believe it will be even higher (though another 16 percent of millionaires think the index will be flat).

Given the bullish S&P outlook among the millionaire majority, it's no surprise that a majority of wealthy households (60 percent) believe their assets will be higher by the end of the year. Thirty-four percent believe their assets will be the same, and only 6 percent believe they will be lower.

Many millionaires believe the U.S. economy will be unchanged by year-end, but only 14 percent believe the U.S. economy will be weaker. So where are the wealthy placing their market bets?

The millionaire asset allocation

Source: CNBC

Forty-five percent of total investable assets held by wealthy households are allocated to equities with 17 percent in fixed income and 16 percent in real estate, and the wealthy will continue to invest in equities in 2014. Forty-six percent will be allocated to equities, and 21 percent to fixed-income products over the next 12 months.

While fixed-income allocations typically rise with age, the differences in asset allocation among millionaire age groups were not considered significant in the survey. Even retired investors retained a 43 percent equity weighting (compared to 48 percent for younger millionaires).

Millionaires are diversified investors, with no single stock comprising more than 4 percent of holdings. ExxonMobil is the stock that the largest percentage of wealthy households currently own, followed by General Electric (3 percent), IBM (3 percent), Apple (2 percent), AT&T (2 percent) and Berkshire Hathaway (1 percent). Wealthy households diversify broadly across sectors, too.

Millionaires like tech, too

Source: CNBC

The most popular sectors for wealthy investors are technology, energy and financials. The least popular sectors are materials and consumer discretionary.

Even millionaires over the age of 70 and retired millionaires showed their largest allocation by sector to technology (78 percent and 77 percent, respectively). Democrats most favor technology, with 85 percent invested in technology above all other sectors.

Technology is not where millionaires concentrate their assets, though. At 20 percent, financial-sector investments receive the largest percentage of investor assets (among those with assets spread across each category), followed by technology (19 percent).

Investors with more than $5 million in assets have a greater allocation to financials, industrials, utilities and health-care stocks than the less wealthy.

What does the American dream mean to you?

Source: CNBC

The vast majority of today's millionaires agree that the American dream remains attainable, but they don't necessarily agree on what that iconic concept means.

Forty-five percent define it as "prosperity, success and upward ability through hard work." Eighteen percent believe it is "spiritual and temporal happiness rather than material goods," while another 18 percent believe it is "attaining whatever I want through hard work."

The wealthiest households are the most likely to tie the American dream to upward mobility and success at 63 percent, compared to 42 percent of those with less than $5 million.

There isn't too much of a millionaire guilt complex—more than 80 percent of wealthy households believe they have earned their wealth. However, just over half (51 percent) of America's wealthy believe that inequality of wealth is a major problem, with women millionaires and households with more than $5 million in assets more likely to feel this way. The percentage of Democrats (86 percent) is five times greater than the number of Republicans (20 percent) who believe inequality of wealth is a problem, with Independents in the middle at 57 percent.