Many More Millionaires by 2020: How Will Your State Stack Up?
The number of millionaires is forecast to rise 72.5% to 65.5 million worldwide by 2020 from about 38 million this year. In the United States, home to nearly half the world's millionaires, the increase is expected to be even sharper: a 96.2% jump to 20.6 million. The estimates of household wealth are based both on financial assets such as stocks and bonds, and nonfinancial assets like primary residences and business ownership.
How much wealth are we talking about? Trillions upon trillions of dollars. Worldwide, the value of assets held by millionaires is $92 trillion this year, and that figure is expected to more than double to $202 trillion in 2020. For U.S. millionaires, total wealth is also predicted to more than double, from $39 trillion today to $87 trillion by the end of the decade.
"Economic growth is the big driver," says Andrew Freeman, executive director of the Deloitte Center for Financial Services. "You have countries like China spawning off tens of millions of middle class into millionaires. The middle class, overall, are going to ride this long-term growth."
Where the Wealthy Will Be
In the U.S., California, Texas, New York and Florida will be home to the greatest numbers of millionaires in 2020, while the Midwest will host the fewest. The annualized growth of millionaire households in the U.S. is expected to reach 7% to 8% during the decade, though that rate will vary widely from state to state: South Dakota and North Dakota, for example should see their populations of millionaires grow at about 10% a year, while Connecticut is forecast to see a much lower 4% growth rate.
Among the 50 states, California is expected to hold onto its No. 1 rank as having the most millionaires among the 50 states. That number is expected to exceed 2.7 million in 2020, up 51.9% from last year. Northern California's Silicon Valley and Southern California's entertainment industry will be the primary drivers of this wealth growth, says Freeman.
Within the Pacific Southwest region, Arizona's millionaire pool is anticipated to grow at a higher than average annualized rate of 9%. The same goes for Vermont in the Northeast region. Vermont, however, is starting from a relatively small base: Today, there are only 19,000 millionaires in the state.
And while Connecticut's annualized growth rate for millionaire households is expected to be the weakest in the U.S., it currently maintains the highest density of millionaires for any state in the U.S. at 14.2%. But by the close of the decade, New Jersey is anticipated to have the highest density of millionaires at 24.6%, according to the study.
Freeman says it's difficult to pinpoint the reason for New Jersey's predicted shift in millionaire density, other than to note that the state is popular among companies looking to incorporate, and as the economy picks up, attorneys that work with the business courts in neighboring Delaware are likely to reap financial rewards.
Money Will Keep Retiring to Florida
On the East Coast, New York and Florida are forecast to have the fastest growth rates for new millionaire households. New York is expected to increase its number to nearly 1.5 million by 2020, a 92% increase over 2010. And Florida is expected to reach 1.4 million in 2020, more than doubling from 596,000 last year.
"In New York, everything is geared toward Wall Street. That's the real engine and wealth generator," says Freeman, noting the markets expected resurgence over the coming decade. "Also, New York is one of the areas with the most expensive real estate, and as the economy comes back, that will improve."
The source of Florida's bumper crop of millionaires, by contrast, its expected to be all the baby boomers who will migrate to the sunny southern state when they retire.
Says Freeman: "Florida is a baby boomer retirement story. That's its big background trend."