Everybody sees millionaires as wealthy, except for millionaires themselves, a new study suggests.
Only 8% of investors with $1 million consider themselves wealthy, a recent report from Ameriprise Financial found. Instead, 60% categorized themselves as upper middle class, and a notable 31% considered themselves middle class. The study revealed wealth is more than just hitting a specific dollar number or lifestyle. Rather, it's a mindset and a feeling of security.
"I think that people of wealth tend to be cautious and they tend to be open minded, and they tend to be intentional," said Kimberly Maez, a private wealth adviser at Ameriprise Financial. "Whereas it's not necessarily some of the things we always think it is. It's a little bit more behavioral mindset focused."
The study surveyed over 3,000 Americans between the ages of 27 and 77, roughly 600 of whom were millionaires and revealed insights in their conception of wealth.
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According to the study, 85% of millionaires believed that wealth meant "a sense of financial security." Meanwhile, 66% thought of wealth as the ability to provide for themselves and their families, while 58% associated it with the freedom to do what they wanted.
Maez noted that the rich’s conception of wealth was not necessarily grounded in luxury.
"It's not like driving supercars necessarily," she said. "It's just being more cautious and careful in trying to ensure that they are protecting what they've got because people of wealth also have a little bit of fear. They know how hard it's been to build it and they know it can go away quickly."
Still, the study revealed a stark contrast between investors with more than $1 million and those with less.
Of the millionaires surveyed, 62% of them said their top financial priority was "protecting accumulated wealth," 43% said "saving for retirement," and 32% said "managing market volatility."
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Meanwhile, the study found that 49% of investors with less than $1 million in assets prioritized "saving for retirement," and 42% said "managing day-to-day living expenses." The study also found that 35% said "increasing income" and "paying down debt" were big priorities.
Travis Sholin, financial adviser at Keystone Financial Services, pointed out that regardless of financial status, saving for retirement remains a priority for both the wealthy and the less so. He observed that "there is an emotional scarcity mindset that is inherent in all people" and that $1 million no longer has the same value due to inflation and rising costs of living.
"Those who have accumulated more do not want to lose it, and those still accumulating are still concerned about the day-to-day expenses," he said. "Both parties want security in their retirement. With increased inflation and the cost of living, everyone is feeling the pinch right now. Even the millionaires."
Maez said that the wealthy tend to be more risk-averse than they get credit for. Consequently, they focus on protecting the wealth they have rather than living extravagantly. She said many of her clients bargain hunt when shopping and avoid unnecessary expenses.
"Some of the most wealthy people I work with are also some of the most grounded people. So they don't, they're not caught up in a lot of things that you can get caught up in."
In fact, only 13% pointed to “luck" as a top driver behind their ability to amass more than $1 million. Instead, "financial planning and investing" (80%), "making a good income" (71%), and "living within my means" (69%) were the top reasons for their success.
Americans could learn from the longer-term millionaire mindset, Sholin said.
"Even for older people…educating themselves and their children and grandchildren about the importance of thinking long term with investments and wealth," he said. "Because that's really what it comes down to. If they can psychologically create that long-term mindset, that's how families become successful."
Dylan Croll is a Yahoo Finance reporter.
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