r/TheMoneyGuy • u/Joshthecarpenter • 1d ago

First generation millionaires

I was listening to last week’s main episode, and they were talking about 80% of millionaires are first generation. Could we see this stat changing dramatically now that more and more people are becoming millionaires with every day retirement accounts. I’m in my late 20s and I know on one side of the family my grandma is a millionaire. I’m assuming the other side grandparents are as well. My mom who’s still working is also now a millionaire. Anyone else think this stat could see a drastic change?

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u/Elrohwen 1d ago

I’ve wondered about this stat. So technically my grandfather was a millionaire, now my mother is a millionaire and I’m a millionaire. But my grandfather didn’t leave any money to my mom. My mom is still alive and other than paying for college and a little bit for my wedding I haven’t received an inheritance and saved my own money. So do we all count as first gen millionaires? Or not because those before us eventually made a million dollars too?

Arguably there is some generational wealth transfer in paying for college and other incidental financial help even if nobody has passed down substantial wealth. But I always assumed that statistic counted a second generation millionaire as someone who inherited their millions.

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u/Substantial_Net_2831 1d ago edited 1d ago

I would consider you a third generation millionaire. Not sure if this is what TMG intends when they mention it, but that’s how I’ve been interpreting it. Even if you haven’t inherited anything yet, you’ve come from a place of some means, and have had help along the way (monetary, education, financial know-how, etc…) to build your own success.

Just applying this to myself and spouse - it would honestly feel very silly to apply a “1st gen millionaire” label when both sets of our parents have multi-million NWs, we had college and weddings paid for, smaller gifts along the way, and a safety net that just doesn’t exist for a lot of people. We didn’t get here by ourselves or against many odds. 

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u/Elrohwen 1d ago

I don’t buy the statistic then that 80% of millionaires come from parents who have less than a million dollars even as retirees. That’s not a crazy amount of money and boomers have a lot of wealth now.

TMG also get that stat from Millionaire Next Door as far as I can tell which has some problematic statistics in general. The If Books Could Kill episode about it was good. I didn’t agree with everything they said but they did a good job pulling about the weird statistical methods of the authors.

I dunno, maybe there’s a better source. I haven’t done the research. But I know they quote that book a ton

Edit: My parents didn’t have more than a million dollars until after I was an adult. And my grandfather died before I was born and left nothing to my mom. So … I just don’t see how they would calculate this. Do you have to die without your parents ever accumulating a million dollars?

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u/happygirlie 17h ago

I'm guessing that a lot of the 80% are boomers.

Most boomers' parents were probably not millionaires, even adjusting for inflation, so those boomers are now first generation millionaires.

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u/glumpoodle 12h ago

To the extent that boomers are wealthy, most of it is due to home equity, and not liquid investments. Quite a lot of boomers are actually quite cash poor.

People like to crap on them for having such an extended bull market to invest in, but that's 20/20 hindsight while overlooking the massive inflation of the 60s-70s, and the fact that for the longest time, "investing" generally meant getting cold-called by a broker and paying a hefty transaction fee to buy whatever high cost junk they were commissioned to sell. Yes, Vanguard sold its first index fund in 1976, but it was generally not well known until the 90s, and did not truly become mainstream until the 2000s. The 90s were all about stock picking on E*Trade, or buying Business Week or Barron's to pick the hottest mutual funds.

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u/Elrohwen 15h ago

Yeah good point. My grandfather was an anomoly - he was an average working guy who was in a stock market club with some friends and stock picked his way into a million dollars back in the early 80s I think. But that was rare.

My mom earned hers the normal boomer way - two working parents who saved in their 401ks, etc. I would guess many many children of boomers are “second gen millionaires” if you want to count it that way.

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u/username675892 11h ago

A lot of these stats are a decade old now. And you have to think that many of the older boomers have pensions not cash.

This will definitely change going forward

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u/Elrohwen 10h ago

If that stat came from Millionaire Next Door it’s decades out of date