Pay off debt faster and save more with Ramsey+.

Skip to Main Content

How Do You Define Millionaire?

The meaning of the word millionaire is pretty straightforward, right? If you’ve got $1 million in the bank, you’re a millionaire. Done. And if you’ve got that much money stashed away, then you’re set for the rest of your life, right?


Depending on your goals, $1 million might not be enough to put you on Easy Street for life. We all have different dreams for our future, and our definitions of wealth and financial security are going to be different, too. The good news is, you get to define them for yourself. But . . . how? We’re glad you asked.

What Is a Millionaire?

The most basic definition of millionaire is somebody who has $1 million. But that definition can be misleading. What if a guy has $1 million in cash under his mattress but owes the bank $20 million? Is he still a millionaire? Not really. That’s why we prefer to use the term net-worth millionaire.


Your money can work harder with fresh eyes and some TLC. Find a SmartVestor Pro.

Now in order to define net-worth millionaire, we need to first talk about net worth. Here’s a simple way to explain net worth: It’s what you own minus what you owe. If that amount ends up being $1 million or more, you’re a net-worth millionaire. Make sense? Let’s look at an example.

John and Maria have accumulated $750,000 in mutual funds and savings. Their house is worth $350,000, and they own two vehicles worth $12,000 each. Altogether, their assets total $1,124,000. However, they still owe $150,000 on their home, have $10,000 of credit card debt, and owe $20,000 on their student loans. Their liabilities add up to $180,000.

To figure out if they’re net-worth millionaires, let’s subtract what they owe from what they own.

What they own:             $1,124,000

What they owe:        –    $180,000

Net worth:                    $944,000

In this situation, John and Maria would not meet the definition of net-worth millionaire. They’re close, but they haven’t hit that mark yet.

However, let’s run the numbers again to see what would happen if the couple didn’t have any student loan or credit card debt and they owed $100,000 on their mortgage instead.

What they own:            $1,124,000

What they owe:        –    $100,000

Net worth:                    $1,024,000

In this situation, John and Maria would be considered net-worth millionaires. And if they got serious about paying off that mortgage—because you never want to take a mortgage with you into retirement—they could invest and save even more.

Are you a net-worth millionaire? Check out our Net Worth Calculator to find out.

What Does a Real Millionaire Look Like?

So we’ve covered what a millionaire is, but what exactly does a real millionaire look like?

Maybe you’re picturing someone who lives in a big house, drives a nice car, and wears expensive clothes. Maybe they even have a good chunk of money in their retirement account. That person could be a real millionaire, but they also might not be. The mortgage lender could own the house, the bank could own the car, and a credit card could have been used to buy the clothes. People can look like a million bucks, but sometimes they’re often one step away from losing it all. Folks, that’s not okay! In fact, it’s a recipe for disaster!

We’d be willing to bet you want you to become a real millionaire—someone who actually has $1 million or more in assets and zero debt weighing them down. 

If becoming a millionaire seems impossible, we’ve got some good news for you. Our Ramsey research team conducted the largest study ever done on millionaires, and we found that the vast majority of them are ordinary folks just like you and me. In fact, the top three professions of millionaires were accountants, engineers and teachers! Anyone, on any income, can build wealth. You just need the right plan.

What Does Being a Millionaire Mean Today?

If you ask 10 people what being a millionaire means, you’ll likely get 10 unique answers. But if you were to ask that question a few generations ago, the response would probably have been a little different. That’s because back in the day, having $1 million in the bank meant you could sleep easy at night. For a lot of people, that number was the target to hit. You would have enough money to enjoy your retirement years without worrying.

But that was a long time ago, and two things are different now: cost of living and the length of retirement. Let’s talk about how those have changed the power of $1 million and the definition of wealth over the years.

1. Cost of living

You probably know this, but it’s worth repeating—it costs more to live in 2021 than it did in past decades. For example, $1 million in today’s dollars would have been worth roughly $1.54 million in 2000.(1) Hello, inflation.

And if the inflation rate stays at about 2.5% for the foreseeable future, $1 million today will be $1.63 million in 2031.(2) That means your nest egg will be worth about $600,000 less in 20 years.

Now, why are we throwing these numbers at you? Because you need to plan for cost of living to go up as you get older. Depending on what you want to do in retirement, $1 million may not be enough to live out your retirement dreams.

2. Length of retirement

From 1950–55, the median age of men retiring was about 67 years, and they were expected to live to age 78.(3) Fast-forward to 2018 and the average retirement age is 62.(4) Plus people are expected to live into their 80s.(5) In the 1950s, you had to prepare for a decade of retirement. Today, you could be retired for 20 years or more. That’s a long time to provide for yourself!

For many people today, the classic definition of millionaire is no longer the goal to reach. Rather, they’re working toward having enough to feel financially secure. Let us show you what we mean.

What Does Financial Security Mean to People?

Now, don’t get us wrong: $1 million is a lot of money. And when you reach that milestone, you should celebrate! But for some people, that amount won’t be enough for them to feel financially secure. Even $10 million might not be enough. That’s because financial security is a personal thing and looks different for each of us.

For some people, financial security means having a second property to enjoy with friends and family in retirement. Or it might mean the flexibility to work part-time to focus energy on hobbies or travel. Or maybe it means you want to build lots of wealth so you can be outrageously generous.

At the end of the day, security is knowing there’s enough money in the bank to take care of your needs. It won’t look the same as your friends, your family or your neighbor’s—and that’s okay!

The X Factor in Reaching Your Definition of Wealth

Cost of living and the length of your retirement help determine how much money you’ll need in your golden years. But there’s one more factor—and it’s the most important one.


Do you want to live in a fancy condo on the beach or own a small condo in the suburbs? Do you want to start your own business or explore a new hobby? A person who wants to retire and travel the world will need a lot more in the bank than a person who wants to volunteer in their community and watch their grandkids grow up.

It’s okay if your number is different than the classic millionaire definition. It’s your personal goal, and only you get to decide what that number is—and only you can make it happen.

Start Working Toward Your Wealth Goal

Here at Ramsey, we believe that anyone can build wealth—no matter their background or income. And we believe anyone can become an everyday millionaire. Most millionaires didn’t inherit their money or win the lottery. They got out of debt. They invested every month. They worked with an investing professional. They said no to stupid decisions and didn’t forget their long-term goals. Doing that year after year takes a lot of disciple, but becoming a millionaire is absolutely possible.

Are you ready to do the work it takes to get there? Then get started today!

Work With an Investment Professional

If you want to learn more about hitting that million-dollar mark, it pays to sit down with a pro. SmartVestor is a free program that will connect you with qualified men and women in your area who will help you get on a wealth-building path! Connect with a pro in your area today.


Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Thank you!  Your guide is on its way.

Build Long-Term Wealth 

Build Long-Term Wealth

Work with an investing pro and take control of your future.
Get Started

Build Long-Term Wealth

Work with an investing pro and take control of your future.
Get Started