Saving Can Make You a Millionaire. Can It Make You Rich?

Key definitions & why millionaire counts differ

Traditional net worth (“millionaire”)

Net worth = (everything you own) − (everything you owe)

• Includes:
  • Primary residence (home equity)
  • Investment properties
  • Retirement accounts (e.g., 401(k))
  • Brokerage accounts
  • Cash
  • Business interests
  • Vehicles
• Excluded via subtraction:
  • Mortgages
  • Student/auto/credit card debt
  • Business liabilities
  • Other debts/obligations

Financial-industry HNWI-like definition (investable-assets concept)

Typically defined as $1M+ in investable assets, such as:

• Includes:

  • Cash/deposits
  • Public stocks
  • Bonds
  • Mutual funds
  • Other investments, including private equity and offshore investments
  • Real estate investments (as investments, not a primary home)

• Excludes:

  • Primary residence
  • Collectibles and durable/personal effects (“things you can live with,” not easily liquid)

Result

A person can be a millionaire by net worth due to home equity, but not by investable assets—and vice versa.

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Wealth-tier framework (used in the video)

• “Millionaire next door”: $1M to $5M
• Mid-level millionaire: $5M to $30M
• Ultra-high net worth: $30M+

Stated global mix:

• ~90% “millionaire next door”
• ~9.3% mid-tier
• ~1% ultra-rich

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US counts and household-share estimates (major numbers)

Headline estimates (as stated)

• ~23.6 million US “millionaires” (including primary residence/home equity)
• ~8.7 million Americans with $1M+ in investable assets (HNWI-type definition)
• Estimated end-2025 wealthy persons: ~8.7 million, plus ~736,000 added that year

Breakout estimates (US)

• “Millionaire next door”: ~7.8 million
• Middle-class millionaires: ~812,000
• Ultra-high-net-worth individuals: ~87,000

Household comparison (using ~133 million households, per the video’s model)

• Millionaire next door: ~5.9% of households
• Middle-income millionaires: ~0.61% of households
• Ultra-rich: ~0.07% of households

Equivalent ratios:

• 1 wealthy individual / ~15 households
• 1 middle-class millionaire / ~163 households
• 1 ultra-rich / ~1,525 households

Caution / disclaimer about methodology

The video says it combines two datasets with different measurement methods and may double-count couples in the same household; therefore the numbers should be treated with “skepticism.”

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Macro/behavioral context: wealth accumulation over the life cycle

Federal Reserve Consumer Finance Report (cited latest: 2022)

Wealth by age (median / average):

• <35: median ~$39,000
• 35–44: median ~$136,000, average ~$550,000
• 55–64: median ~$365,000, average ~$1.6M
• 75+: median ~$336,000, average ~$1.6M

Additional age/probability claims

• “Typical millionaire” age estimated: ~62
• Only 1.4% of households headed by people under 30 had seven-figure wealth

Ramsey Solutions survey (voluntary sample of 10,000+ millionaires)

• Time to reach $1M: average 28 years
• Average age: 49
• 8/10 were consistently invested via employer-sponsored retirement plans
• 31% had average career income ≥ $100,000
• 1/3 never earned $100,000 in any year

Explicit limitations

• Ramsey sample is not necessarily representative
• Participants skew closer to $1M than $30M
• Occupation list does not show which jobs have the highest probability of producing wealth

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Types of assets associated with becoming wealthy

Liquidity/access point (home equity vs portfolios)

• Home equity can make someone a millionaire, but is less accessible than money in 401(k)/brokerage
• Home equity can be sold, borrowed against, or inherited

Investment vs housing composition

• Cited analysis:
  • ~40% of millionaires’ wealth in stocks, bonds, mutual funds, and retirement accounts
  • For non-millionaire households: ~24% in those categories

Ownership + employment income mix (tax-data study mentioned)

• Over 69% of top 1% income earners had through-business income
• Among the richest 0.1%: >84% through-business income
• >90% of S-corp owners reported being actively involved

Examples of industries/roles named:

• Top 1% owners: doctors’ offices, dental clinics, professional/technical services, specialized contracting, legal services
• Richest 0.1% categories: management companies, financial investments, car dealerships, professional/technical services, oil & gas extraction

Core concept: wealth often comes from owning business assets that generate profits, not only wages.

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Portfolio growth math (strategy framework and key numbers)

Illustrative assumptions in the example

• Investments earn ~7% per year
• Contributions grow with inflation (for the example)

Annual savings required (approximate)

To reach $1M

• 20 years: ~$24,000/year
• 30 years: just under $11,000/year
• 40 years: ~$5,000/year

To reach $5M

• 20 years: ~$122,000/year
• 30 years: ~$53,000/year
• 40 years: ~$25,000/year

To reach $30M

• 20 years: ~$732,000/year
• 30 years: ~$318,000/year
• 40 years: ~$150,000/year

Recommendations (explicit actions mentioned)

• Start early; invest consistently
• Use employer match (“using your full employer match”)
• Increase contributions as income rises
• Keep money invested; avoid unnecessary withdrawals
• Use additional accounts alongside 401(k):
  • IRA
  • HSA
  • Taxable brokerage
  • (spousal retirement accounts mentioned later)

401(k) feasibility examples

• “A 25-year-old starting today”:
  • Could become a millionaire in 40 years
  • By investing ~$5,000/year (~$400/month) at 7%
  • Employer contributions may cover a meaningful portion
• Vanguard modeling cited:
  • A 30-year-old with $60,000 income saving 10%–15% could potentially exceed $1M by age 65 (depends on returns/assumptions)

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Goal-dependent path realism & cautions

Higher targets (e.g., $5M–$30M)

The video stresses that:

• Required savings become very large (often effectively exponential relative to time)
• At $20M–$30M, wealth commonly involves:
  • Private business ownership
  • Concentrated stakes
  • Scaled professional practices
  • Significant executive compensation
  • Investment real estate
  • Inheriting large assets
  • …not only 401(k) contributions

Business risk disclaimer

Entrepreneurship can create wealth, but carries extraordinary risk (failure, debt, income drying up, staff/customers leaving, lawsuits, recessions).

Strategic conclusion

• Match the strategy to the goal: employee vs entrepreneur paths both have risks and advantages.

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Tickers / assets / instruments explicitly mentioned

Accounts / instruments

• 401(k)
• IRA
• HSA
• Taxable brokerage

Asset classes

• Stocks
• Bonds
• Mutual funds
• Retirement accounts
• Public investments
• Real estate investments
• Private equity

Note: No specific public stock tickers/ETFs/crypto were named.

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Methodology / step-by-step frameworks mentioned (as described)

Equity / net-worth calculation (traditional)

• Equity = (value of owned assets, incl. home and investments) − (debts and liabilities, incl. mortgage/loans/credit cards/business liabilities)

Wealth-tier classification (investable-assets-based)

• Use $1M+ investable assets excluding primary residence/personal effects
• Bucket into:
  • $1–$5M
  • $5–$30M
  • $30M+

Wealth projection example (future value illustration)

• Assume 7% annual return
• Assume contributions grow with inflation
• Compute required annual savings over 20/30/40-year horizons

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Disclosures / disclaimers noted in the subtitles

• No explicit “not financial advice” disclaimer was stated in the provided subtitles
• Model/estimation disclaimer:
  • Numbers are approximate and should be treated with skepticism due to combining datasets and household vs individual counting
• Entrepreneurship caution:
  • Business ownership involves significant risk

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Presenters / sources mentioned

• Aaron (channel host)
• Root Financial (organization providing education/counseling)
• Federal Reserve (Consumer Finance Report; data cited as 2022)
• Ramsey Solutions (survey of 10,000+ millionaires)
• Vanguard (modeling referenced)
• World Well-being Report (global/wealth estimates)
• Census Bureau (households referenced: ~133 million)
• UBS (finding about owner-occupied property as a major asset for many net-worth $1M–$5M)
• Owen Zidar (co-author of Millionaires Everywhere)