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The Millionaire Quiz: Do You Have What It Takes?

the editors of Kiplinger's Personal Finance

Being a millionaire isn't a ticket to mansions, yachts and caviar, as it once was, but the goal is more reachable than ever. According to Phoenix Marketing International, a firm that tracks the affluent market, 6.2% of U.S. households now have investable assets of $1 million or more.

That's only one way to measure if someone's a millionaire, of course. A net worth of $1 million also qualifies; subtract liabilities, including mortgages and car loans, from assets, including home equity and retirement savings, to determine your net worth. (Use our Net Worth Calculator to get your number.) Either way, hitting the million-dollar mark is no small feat.

Do you have what it takes to be a millionaire? Take our quiz to find out the often surprising answers.

1: As a child, you never summered in Martha's Vineyard or shipped off to boarding school. Do you stand much chance of making millions if your parents aren't rich?

  1. A. No. The majority of U.S. millionaires come from money.
  2. B. Yes. Most U.S. millionaires are self-made.

The correct answer is B. B. Yes. Most U.S. millionaires are self-made.

Just like Oprah Winfrey and the protagonists of virtually every Horatio Alger novel, the vast majority of Americans with a net worth of at least $1 million were not born rich. In fact, just 1 in 5 millionaires received money from a trust fund or an estate, according to "The Millionaire Next Door" by Thomas J. Stanley and William D. Danko. During his 30 years researching the wealthy, Stanley says he consistently found that between 80% and 85% of all millionaires are self-made.

Among our favorite rags-to-riches millionaires: Radio One founder Catherine Hughes, a teenage mom and college drop-out; Tastefully Simple CEO Jill Blashack Strahan, who grew up on a farm; and entrepreneur Ali Brown, who had less than $20 in her bank account when she launched her first marketing company in 1998.


2: You have an advanced degree in some high-powered field, such as medicine or law. Does that degree mean you're more likely to be a millionaire?

  1. A. Yes. Most millionaires have graduate degrees or better.
  2. B. No. Most millionaires stopped way short of a PhD.

The correct answer is B. B. No. Most millionaires stopped way short of a PhD.

With condolences to those with grad school debt, an advanced degree does improve your chances of higher lifetime income, but it doesn't necessarily improve your chances of joining the millionaires' club. Only 18% of those with a net worth of $1 million or more hold a master's degree, while 8% have law degrees and 6% went to medical school, according to "The Millionaire Next Door."

Seventy-four percent of millionaires do have an undergraduate degree, even if they didn't stick around for their MA or PhD, according to Spectrem Group, a consulting firm that specializes in wealth research and management. (Spectrem defines a millionaire as someone with a net worth of $1 million excluding the value of a primary residence.) And don't get us wrong: Many graduate degrees are worth the effort. The median salary of someone with an advanced degree is $78,624 a year, according to the U.S. Bureau of Labor Statistics, versus $68,120 for the typical four-year college graduate. A high school grad earns just $37,752 annually.

3: Millionaire math quiz: Which savings strategy will get you to $1 million in the bank by age 65, assuming 8% annualized returns?

  1. A. Save $200 a month, starting at age 20.
  2. B. Save $400 a month, starting at 30.
  3. C. Save $800 a month, starting at 40.
  4. D. Save $1,500 a month, starting at 50.

The correct answer is A. A. Save $200 a month, starting at age 20.

Behold the magic of compounding! A 20-year-old who saves $200 a month until retirement would have around $1,055,000 at age 65. That's not bad for less than the cost of a monthly pizza tab in some households. If you wait until age 30 and kick in $400 a month, that number drops to about $918,000. A 50-year-old contributing $1,500 a month would have only $519,000 by retirement.

Wealth creation lies in compounding. Each year, your money can earn interest on both the original amount and the interest earned from the year before. More years equals more interest, and more interest means faster asset growth and an easier path to $1 million.

4: You know your way around stocks and bonds, but you aren't exactly the next Warren Buffett. Do most millionaires rank with the pro investors?

  1. A. Yes. Most millionaires know a lot about investing.
  2. B. No. When it comes to investing, most millionaires still have a lot to learn.

The correct answer is B. B. No. When it comes to investing, most millionaires still have a lot to learn.

You don't have to study finance or memorize stock tables to make a million. In fact, 58% of millionaires say they have a "great deal" to learn about investing, according to Spectrem Group, and 19% admit to knowing little to nothing about investments. This should give some comfort to those of us with index funds and "Investing for Dummies" books.

Despite that lack of expertise, millionaires do invest. Individual U.S. stocks and U.S. stock mutual funds are the favored investments. And the wealthy aren't shy about soliciting professional advice: About two-thirds of millionaires report consulting with financial advisers at least to some degree.

5: True or false: There are more households in the U.S. with $1 million in investable assets now than there were in 2006, before the Great Recession hit?

  1. A. True.
  2. B. False.

The correct answer is A. A. True.

Millionaires have fared well over the past decade-plus since the housing bubble burst and financial markets cratered. Today, there are 7.7 million U.S. households with at least $1 million in investable assets, up 43% from before the Great Recession, according to Phoenix Marketing International.

What explains the growth? It's not like millionaires avoided the downturn altogether. In fact, their numbers fell sharply between 2007 and 2009 as the global economy imploded. However, the fate of millionaires tends to track the stock market. When the S&P 500 index falls, millionaires see their wealth decline. When stocks recover, as they have mightily in this 10-year-old bull market, their portfolios do, too.

6: You have a good but not high-paying job. Let's say, for instance, that you write quizzes on the Internet. Forget about ever becoming a millionaire, right?

  1. A. Yes. Most millionaires have glamorous, high-level management jobs.
  2. B. No. Millionaires hail from across the job spectrum.

The correct answer is B. B. No. Millionaires hail from across the job spectrum.

Sure, 13% of people with a net worth of $1 million-plus are managers, but 11% work in education, according to Spectrem Group. According to "The Millionaire Next Door," about two-thirds of millionaires are self-employed, often in everyday professions ranging from pest control to property management.

No matter where you work or how much you make, what's important is starting to save early and continuing to save over time. Take the case of Paul Navone, who never earned more than $11 an hour as a quality-control inspector at a glass plant. Yet, the retiree accumulated more than $3 million, thanks to his unwavering savings discipline and sound investments.

7: Millionaire math quiz, part two: If you're 45 and have no savings, how much will you need to put away each month in order to retire at 65 with a cool million (assuming 8% average annual returns)?

  1. A. $700
  2. B. $1,700
  3. C. $7,000
  4. D. $17,000

The correct answer is B. B. $1,700

It's never too late to make a million, but it takes more money as you age. The longer you wait, the steeper the climb. Compare our 45-year-old, who will need to save $20,400 a year to hit $1 million by age 65, with a 25-year-old, who will need to save $3,445 a year to reach the same mark.

Try Kiplinger's retirement savings calculator to figure out how much money you need to save.

8: You want to learn from the habits of as many wealthy neighbors as possible. Where would you move if you wanted to rub elbows with the highest concentration of fellow millionaires?

  1. A. New York City
  2. B. Los Angeles
  3. C. Chicago
  4. D. San Jose

The correct answer is D. D. San Jose

Although the New York metro area is home to the most millionaire households, followed by L.A. and Chicago, Silicon Valley (specifically the San Jose-Sunnyvale-Santa Clara metro area) has the highest concentration of millionaires on a per capita basis. An impressive 12.7% of the households boast investable assets of $1 million or more, according to Phoenix Marketing International.

Big cities don't have a monopoly on millionaires. Small towns are magnets for wealthy residents, too. Topping the list of tiny millionaire cities is Summit Park, Utah. Thanks to world-class skiing, luxury shopping and Robert Redford's Sundance Film Festival, the metro area, which also includes Park City, has everything a millionaire could ask for and more. In total, the Summit Park area counts 1,880 millionaire households out of 15,027 total households. That works out to a per capita rate of 12.5%.

9: True or false: Millionaires already have enough money for retirement, so they don't need to bother with silly things like 401(k)s and IRAs.

  1. A. True. There's no benefit to contributing to a retirement account if you're already sitting on $1 million.
  2. B. False. Even millionaires need to save for retirement.

The correct answer is B. B. False. Even millionaires need to save for retirement.

Millionaires still worry about retirement. According to Spectrem, 30% of millionaires are concerned they may not be able to retire when they want. Even super-savers who already have more than a million saved in just their 401(k) plans continue to squirrel more money away, contributing an average 14.9% to their accounts, according to Fidelity.

10: Finally, let's say you make around $75,000 a year, roughly the income of the average registered nurse, according to the U.S. Bureau of Labor Statistics. Would you be happier if you made $1 million a year?

  1. A. Definitely. Think how many overseas vacations that could buy!
  2. B. Probably not. Studies show that even $1 million doesn't buy happiness.

The correct answer is B. B. Probably not. Studies show that even $1 million doesn't buy happiness.

Money can't buy love, and it can't buy contentment either. A 2010 study out of Princeton University found that people generally get happier as they make more money, at least until they hit the $75,000 salary mark. At that point, things level off.

A higher income did impact participants' overall evaluation of their lives, however. Someone taking home $300,000 a year will feel more successful and secure than someone making minimum wage. But on a day-to-day basis, at least, a nurse making $75,000 a year should feel just as happy as a high-paid surgeon. (All the more reason why registered nurse ranks high on our list of the best jobs of the future.)

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