We figured out when millionaires will be considered middle class in the United States

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Becoming a millionaire is still a steep goal for most Americans, but if wealth continues to grow for the typical family, it’s possible that a seven-figure net worth could be relatively common for the middle class in the future.
Using data on the wealth of American families from the Federal Reserve, we made a very rough estimation of what could happen if recent trends in wealth growth continued into the indefinite future.
Depending on what assumptions we made, the typical American family could have a net worth over $1 million by the end of this century, or it may take several millennia to hit that milestone.
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While building a nest egg of a million dollars remains a pretty steep goal for many Americans, it’s possible that within a century, being a millionaire could be a common part of the American middle class experience.

To get at least a very rough idea of when middle-class millionaires could be more commonplace, we took a look at what would happen if recent trends in wealth growth were to continue into the future. That rough estimate, depending on exactly which assumptions we make, ranges from just a few decades from now to over two thousand years into the future.

How the wealth of the middle class has grown over the years

The Federal Reserve’s Survey of Consumer Finances program assembles detailed data about the financial situations of American families every three years. One of the basic measures is the median net worth for families, which is defined as the difference between a family’s assets and its debt for a family right in the middle of the wealth distribution.

Here’s how real median net worth for families changed between 1989 and 2016, the most recent survey year. Each year has been adjusted for inflation to 2016 dollars:

Business Insider/Andy Kiersz, data from Survey of Consumer Finances

The impact of the Great Recession, which started in 2007, immediately pops out from the graph. Median family net wealth dropped from about $140,000 in 2007 to about $85,000 in 2010. Only by the most recent survey in 2016 was there at least the beginning of a recovery for the typical household, but median family wealth remains far below its peak.

To get a sense of when it might be possible for millionaires to be considered middle class, we can estimate what might happen if recent trends in median family wealth were to continue into the indefinite future.

Of course, this type of prediction is an extremely rough estimate, since recent trends can dramatically change and past results are no guarantee of future performance.

Wealth has grown quickly in the last few years

Between 2013 and 2016, median household wealth increased from $83,700 to $97,300, according to the Federal Reserve data. That works out to an average increase of $4,533 per year over those three years. If median net worth increased by that amount on average every year going forward, median net worth would hit $1 million around the year 2215.

As an alternate scenario, it’s possible that instead of increasing linearly like the example above, with real net wealth increasing some fixed amount on average every year, that wealth could grow exponentially. This is the basic idea behind compound interest in investing.

Using this framework, the $13,600 increase in median net wealth between 2013 and 2016 works out to a compound annual growth rate of 5.1%. If the 2016 real median net worth of $97,300 continued to grow at that compound rate, it would reach $1 million around the year 2063.

Here’s a chart illustrating those two models:

Business Insider/Andy Kiersz, data from Survey of Consumer Finances

In the above calculations, as well as the other estimates to follow, we’re basing our figures on changes in real median wealth. That is, everything is adjusted for inflation to represent the purchasing power of US dollars as of 2016. If we factored inflation into our estimates as well, median family net wealth could hit $1 million sooner, but would represent less actual buying power than $1 million would today.

But in the longer-term, things haven’t been so smooth

As the first chart showing how median net worth changed between 1989 and 2016 illustrates, however, accumulation of wealth for the middle class is not necessarily that smooth.

Looking at that entire period, which includes the big drop in wealth after the Great Recession, median family net worth in 2016 dollars increased from $87,500 in 1989 to $97,300 in 2016. That works out to just an average annual increase of $363, and a compound annual growth rate of just 0.4%.

At that much more meager growth rate, it would take nearly 2,500 years for the median family net worth to grow to $1 million with the $363 per year linear increase. Even with compounding, the typical family would not be millionaires until around the year 2609.

A chart using the same time scale as above shows that much slower growth:

Business Insider/Andy Kiersz, data from Survey of Consumer Finances

As a third scenario, we can look at what would happen with wealth growth along the pre-Great Recession trend. Net worth increased at an average annual rate of $2,900 per year in 2016 dollars between 1989 and 2007, working out to a compound annual growth rate of 2.6%.

With that linear increase of $2,900 per year and starting with the 2016 median family net worth of $97,300, median net worth would hit $1 million in 2328. With a compound growth rate of 2.6%, the typical family would be millionaires in 2106:

Business Insider/Andy Kiersz, data from Survey of Consumer Finances

This is just a very rough estimate

It of course bears repeating that this is a very approximate back-of-the-envelope type of calculation. Predicting the future is always difficult, if not impossible.

As the first chart showed, what looks like a fairly steady upward trend can be totally uprooted, at least temporarily, by dramatic shocks like the 2008 financial crisis and Great Recession. A similar negative shock to the typical family’s wealth — perhaps from another similar economic downturn or from the negative effects of climate change — could greatly delay wealth growth for the median American family.

Shocks in the other direction are possible as well — one can easily imagine technological, social, or political changes that radically transform the economy in a way that could bring about much greater wealth for the average family.

All of the estimates we made above, then, should be taken with a heavy grain of salt.

That said, it’s at least plausible that in the next few decades or centuries, being a millionaire could be a fairly common part of the American middle class experience.

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