19% of Americans Collectively Own $22 Trillion in Assets

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Thursday, July 10, 2008
19% of Americans Collectively Own $22 Trillion in Assets

Based on an analysis by Nielsen's Claritas Services by Jane Crossan and Mike Mancini, a new segment of wealthy Americans has emerged In recent years that represents 19 percent of all U.S. households. Known as the New Mass Affluent, this new crop of wealthy Americans were born of the post-war boom, raised in middle-class suburbs and benefited from college educations and years of economic prosperity during the bull market of the 1990s. Today they're the empty-nesters converting their kids' old rooms to home gyms, the well-heeled shopping at Costco and the workaholics fiddling with their BlackBerry on the express commuter train.

Claritas defines this emerging group as households with incomes above $100,000 and income producing assets of $100,000 or more. That income puts these households in the top 19 percent of all Americans, earning more than double the national median income of $49,280. They collectively own more than $22 trillion in assets. And their numbers are rising: some 22 million households now earn over $100,000, a 23 percent increase from a decade ago after adjusting for inflation. More higher-earning Americans than ever, concludes the report .

The New Mass Affluent consist of eight distinct groups, each with its own lifestyles, media patterns and preferences when considering financial services. But these high-earning households can be difficult to find and even harder to sell. The New Mass Affluent are sophisticated consumers who often tune out traditional marketing strategies, and many simply don't think of themselves as rich.

The groups are segmented into three broad categories based on earnings:

* Higher-income households that earn over $100,000 a year
* Middle-income households earning between $30,000 and $100,000
* Lower-income households that earn under $30,000

The research confirms that, while median household income has moved sluggishly over the last decade, more people are joining the affluent class than ever before. Since 1997, median household income increased a modest 6.5 percent to $48,496 in inflation-adjusted dollars. By contrast, the number of households with an annual income of more than $100,000 jumped 23 percent to 21.7 million. No other income group grew as quickly.

The number of middle-income Americans earning between $30,000 and $100,000 has remained relatively stable for 15 years, shrinking only slightly from 52 percent to 50 percent of the total population, or 57.1 million households.

At the same time, the number of lower-income households earning under $30,000 in inflation-adjusted dollars has slowly declined seven percent to 34.8 million households. With the number of higher-income households increasing and lower-income households decreasing, America's household-income landscape is actually improving.

Rise of the New Mass Affluent (% U.S. Household

1992

1997

2007

2012

Lower Income $30K<

33.3%

33.0%

30.7%

28.4%

Middle Income $30K< $100K

52.2%

51.5%

50.2%

51.6%

Higher Income $100K>

14.5%

15.5%

19.1%

20.1%

Source: Claritas Update Demographics, June 2008 (income in inflation-adjusted dollars)

According to P$YCLE, the segmentation system that classifies households into 58 types based on demographics and financial behavior, eight distinct segments report both earnings and assets in excess of $100,000 to make up the nation's New Mass Affluent. However, these consumer types are very different from each other in terms of demographics, life stage, financial attitudes and preferences for products and services.

TheWealth Market, most closely resembles the traditional portrait of old money. Filled with suburban couples over 65 years old, these 2.6 million households control a much larger share of assets in the country than their numbers would suggest. Some 48 percent of households in this segment have more than $2 million in assets-nearly 44 times the national average-and no other P$YCLE segment even comes close.

Demographically, these super-rich tend to be married, white, more than 68 percent over 55, and empty-nesters. Compared to the general population, they're 10 times as likely to own common stock, nine times as likely to own municipal bonds and seven times as likely to use a broker at Merrill Lynch.

But the New Mass Affluent also includes other segments where the incomes and assets may not be as lofty but are certainly at a high altitude:

* Prosperous Parents are middle-aged families consumed with raising their families, paying off their mortgages and investing in college savings and retirement accounts
* Business Class is home to fifty something executive couples who rank at the top for carrying prestige credit cards
* Jumbo Mortgagees features Baby Boom families living in affluent suburban-fringe subdivisions

New Mass Affluent Segments

Segment Description

Wealth According To Income Producing Assets

% w/HH Income $200K+

Average HH Income

Average Index

The Wealth Market Millionaires

$500,000+

23.0

$178,344

268

Business Class Wealthy Older Mix

$500,000+

16.4

$122,963

184

Power Couples Midscale Mature Couples

$500,000+

15.9

$118,703

178

Family Fortunes Wealthy Middle-Age with Kids

$500,000+

26.8

$122,222

183

Retiree Chic Upscale Older Couples

$100K-$499K

11.7

$97,164

146

Big Spenders Wealthy Middle-Age with Kids

$100K-$499K

15.3

$105,383

158

Jumbo Mortgagees Upscale Middle-Age Mix

$100K-$499K

10.1

$87,937

132

Prosperous Parents Upscale Middle-Age with Kids

$100K-$499K

12.4

$96,502

145

Source: P$YCLE and Income Producing Assets, 2007

Analysis completed by Jane Crossan, Vice President of the Nielsen Financial Services Group, and Mike Mancini, Vice President of Data Product Management Nielsen's Claritas Services

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Research Brief for Thursday, July 10, 2008:
http://blogs.mediapost.com/research_brief/?p=1748

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