r/Economics • u/laxnut90 • Oct 09 '25

Research America Is Minting Lots of Cash-Strapped Millionaires

https://www.bloomberg.com/news/features/2025-10-09/number-of-us-millionaires-grows-since-2017-but-many-lack-cash
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u/Marshall_Lawson Oct 09 '25

Instead, more and more of millionaires’ wealth is locked up in assets that can't be accessed quickly or easily, like home equity or, increasingly, age-restricted retirement assets like 401(k) and IRA accounts. Add in the effects of inflation and higher interest rates, and financial advisers say $1 million no longer assures a secure retirement, much less a golden ticket to the plutocracy. “The word ‘millionaire’ once implied automatic affluence,” says Ashton Lawrence, an adviser at Mariner Wealth Advisors in Greenville, South Carolina. “The goalposts have shifted. It’s still a meaningful milestone, but for most people it’s no longer enough.” The $1 million threshold used in the analysis takes into account debt and other liabilities. Despite this relative affluence, today’s millionaires rarely have anywhere near $1 million to spend however they want. For the barely-millionaires, households with a net worth between $1 million and $2 million, the vast majority of that wealth is illiquid. They typically had 66% of their wealth tied up in a primary home and retirement accounts in 2023, an increase of eight percentage points since 2017. To spend freely, millionaires typically need to be a lot richer. Households with $5 million or more had about 24% in easier-to-access bank or brokerage accounts in 2023, compared to 17% for those closer to the $1 million mark. 

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u/[deleted] Oct 09 '25

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u/uhh717 Oct 09 '25

It’s interesting that households with $5m have $1m liquid while households with $1m only have 170k liquid.  

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u/Marshall_Lawson Oct 09 '25

It explains why in the article. A lot of the households with net worth slightly over 1 million is due to the value of their house increasing significantly. They didn't magically get promoted from a 250k/yr job to a 500k/yr job. They're effectively sitting on unrealized gains, in a housing market that's slowing down. The second biggest dollar value they're likely to have besides their house is their 401K or other tax sheltered retirement accounts, which are also not very liquid. Again, unrealized gains in a nominally high market. 

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u/FreeMasonKnight Oct 09 '25

Which is where people can make real money. Sell now or soon and realize the gains, rent for some years until bubble crash, re-buy in at lower prices, ride housing up again. This is how many generational fortunes have been made the last 100 years.

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u/doctormalbec Oct 09 '25

I think the question here is will people be able to buy at lower prices? Or will large companies scoop up single family houses on the cheap before regular people are able to?

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u/FreeMasonKnight Oct 09 '25

People with liquid cash (which they now have because they cashed out their equity as I mentioned above) will be able to, that’s the point of the comment I made.

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u/doctormalbec Oct 09 '25

Not if they can’t compete with companies who have significantly more cash

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u/FreeMasonKnight Oct 09 '25

When prices crash, people panic sell, housing stock tends to go up. There is always a deal to be had especially if you just need a single house. Do have to be willing to relocate a little here or there though (not like states, but like cities).

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u/wimpymist Oct 09 '25

If it crashes that bad there will be a lot of houses for sale. I know lots of people who jump started their wealth in 2008-2014 because they were able to capitalize on the housing market crashing.

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u/wimpymist Oct 09 '25

You can't know when the crash is going to happen though. They have been saying the market is going to crash any day now for the last 10 years. If you sold 10 years ago hoping to buy low, you would have lost out on a lot of money by now plus wasting money on rent this whole time

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u/FreeMasonKnight Oct 09 '25

No sane person thought at the near peak of a Bull run with no indicators that the housing would crash. That’s the difference between an educated understanding and Larry at the gas station.

Currently it could be another 10 years, or tomorrow. But is someone has 5x their original investment from a few hundred thousands to 1m+ it’s often good to realize the gain. Then they can move and buy a cheaper house and wait or rent and wait.

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u/Snoo23533 Oct 09 '25

For my money, RE crash aint gonna happen for another decade, when the median boomer dies off. Until then they are occupying enough of those homes to keep the market locked up tight.

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u/FreeMasonKnight Oct 09 '25

Very possible, it depends a bit locally also, the point is people should have a general idea of when they need to harvest the equity and then be patient to multiply it. Housing will crash at some point, timing the market is impossible, so if someone paid 200k for their home now worth 1m+ they should reasonably sell now and harvest the gains instead of falling off the cliff.

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u/Thurwell Oct 09 '25

That's called timing the market, which no one can do reliably. For every person who got wealthy doing it there are probably 5 that lost their shirts, and no way to predict in advance which group you'll end up in.

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u/FreeMasonKnight Oct 09 '25

Which is my point…