Does a Million Dollars Make You “Rich” in 2021?

Does a Million Dollars Make You “Rich” in 2021?

You finally did it. After years of scrimping and saving, making intelligent decisions on the stock market, or starting your own business, you’ve finally made it. You’re a millionaire. Congratulations.

With today’s current inflation, tax hikes, and retirement healthcare spending projected at upwards of $290,000, you might wonder, does a million dollars make you “rich” in 2021?

According to financial gurus such as U.S.News, $3 million is now the new $1 million.

Sorry. You are $2 million shy.

Yes, a million dollars is not what it used to be ten years ago. Check out the five top things that make you wealthy and the real net worth it takes to become a real millionaire.

What Makes You a Millionaire in 2021?

Who doesn’t want to be a millionaire? If your current net worth has reached $1 million today, this might include your:

  • House,
  • Vehicles,
  • Other real estate assets,
  • Retirement,
  • Savings, and
  • Investment accounts.

If you have managed to do this, congratulations! You’ve worked hard and made some wise financial decisions.

While most people think of being a millionaire in aggregate terms, the reality is that your income, not your assets (like your house), determines whether you are a millionaire.

For instance, you might have a $1 million in net worth by stringing your cars, home, and accounts together.

But many of these items are not very liquid, and unless you continue to generate significant revenue, you will only spend down your wealth in retirement.

On the other hand, if you have your house to live in, your cars to drive, funded accounts, and $1 million in revenue coming in each year, then you are genuinely a millionaire.


According to Charles Schwab’s 2020 survey, $1.9 million qualified individuals as wealthy in America today. Meanwhile, the average U. S. household has less than half that amount in money and assets.

Perception plays a vital role in how people view wealth. While experts agree that $3 million is the equivalent of $1 million in 2021, many Americans tend to view wealth differently.

  • Wealth might mean a McMansion, yearly cruises, the latest technology, or fancy sports cars for many people.
  • For others, it might mean the ability to no longer live paycheck to paycheck. Some perceive wealth as a bad thing or have a scarcity mindset.

However, most wealthy people understand that money can be made and enjoyed.


Cultural perceptions can also color how you view the difference between wealth and income.

To put it in perspective, to reach the top 37% tax bracket:

  • A single filer needs to earn at least $523.601 each year.
  • Married taxpayers who file jointly will need to make $628.301 together.

Most people in America who fit a millionaire’s definition have reached that title due to their combined assets. But unfortunately, this means that they don’t have $1 million in cash flow.

Since many assets are not very liquid or are not ones that you would sell in a pinch for cash (like your car, house, or land), this means that you might not have $1 million on hand.

On the other hand, if you have multiple streams of income that give you a salary of $1 million per year, you are more likely to ride out any financial storms and maintain your wealthy status.

Financial Security

Having sufficient wealth means that you have a safety net in place. It means that issues that could financially cripple you in the past, such as a car breaking down, a costly household appliance failing, or a medical expense, are no longer as critical.

If you can throw money at a problem and make it go away, you are wealthy. This provides stability and the certainty that you have the funds and resources to take care of yourself or your family in the future.


If you have a million dollars in the bank, but you are drowning in medical bills or debt, this tends to redefine the definition of wealthy.

For example, an average retired couple living to around 80 years old is expected to spend nearly $300,000 on medical bills such as hospital stays, nursing assistants, retirement homes, or personal care.

Be aware of the hard numbers and do your research before settling for $1 million.

If your expenses are less than your income and savings today and in retirement and you have between $1-3 million, you will better enable your money to deliver a rich experience today and a comfortable old age.  


Ultimately, financial freedom means doing what you want when you want. If your $1-3 million not only covers your current and projected retirement expenses, along with any unforeseen bills and luxuries such as shopping, dining, or travel, then most people will consider you a millionaire.

While the actual income numbers matter for tax and expense purposes, living a rich life is not entirely about the amounts in your accounts.

If you have $1 million instead of $3 million and are not only able to meet your own needs but pursue the goals and dreams that you have always wanted to do, then you have achieved financial wealth and freedom.

The Takeaway

Don’t worry if you’re nearing retirement age or already there and haven’t managed to amass $3 million. The most important thing is the quality of life that you enjoy along with your money.

Since not everyone has the same goals, interests, or expenses, one person might live just fine on $40,000 in retirement while another requires $70,000 per year to feel comfortable.

However, maintaining good health, cutting unnecessary expenses, and generating passive income in retirement can ensure that your money goes a long way.

A million is still a lot of money. Achieving this is celebratory. If you have reached this point, you’ve done well.

If you want to pad your future further against unforeseen expenses and inflation, it’s a good idea to figure out how to reduce expenses, stash away money in retirement or HSA accounts for medical costs and increase your income to reach a goal of $3 million.

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