A recent study conducted by Ameriprise Financial has found that only 8% of investors with $1 million consider themselves wealthy. Instead, the majority of millionaires categorized themselves as upper middle class (60%), while 31% considered themselves middle class. The study reveals that wealth is more than just a specific dollar amount or lifestyle, but rather a mindset and a feeling of security.
Kimberly Maez, a private wealth adviser at Ameriprise Financial, suggests that people with wealth tend to be cautious, open-minded, and intentional. She emphasizes that wealth is not necessarily about luxury or material possessions, but about being cautious and careful to protect what one has accumulated, as people of wealth also have fears of losing it.
The study surveyed over 3,000 Americans between the ages of 27 and 77, including approximately 600 millionaires, to gain insights into their conception of wealth. It found that 85% of millionaires believed that wealth meant a sense of financial security, while 66% thought of it as the ability to provide for themselves and their families, and 58% associated it with the freedom to do what they wanted.
The study also revealed a contrast between investors with more than $1 million and those with less. Among the millionaires surveyed, the top financial priorities were protecting accumulated wealth (62%), saving for retirement (43%), and managing market volatility (32%). On the other hand, investors with less than $1 million prioritized saving for retirement (49%), managing day-to-day living expenses (42%), and increasing income and paying down debt (35%).
Travis Sholin, a financial adviser at Keystone Financial Services, points out that regardless of financial status, saving for retirement remains a priority for both the wealthy and those with less wealth. He explains that there is an inherent emotional scarcity mindset in all people, and that $1 million no longer holds the same value due to inflation and rising costs of living. Both parties seek security in their retirement, especially with increased inflation and living costs.
Maez adds that the wealthy are more risk-averse than they are often given credit for. They focus on protecting their wealth rather than living extravagantly, often bargain hunting and avoiding unnecessary expenses. Sholin acknowledges that there may be a chicken and egg issue at play, where the rich acquired their priorities by virtue of their wealth. However, he believes that Americans can learn from the longer-term millionaire mindset and educate themselves and future generations about the importance of thinking long-term with investments and wealth.
In conclusion, the study highlights that wealth is not solely defined by a specific dollar amount or lifestyle, but by a mindset and a feeling of security. It also reveals that millionaires prioritize protecting their accumulated wealth and saving for retirement, while those with less wealth focus more on day-to-day living expenses and increasing income. Both groups seek security in their retirement and can learn from the risk-averse and long-term mindset of millionaires.
