Simply rich
2005 WAS A GOOD YEAR FOR millionaires. Not that there are many bad years for millionaires, of course, but last year was especially rewarding, and especially in Los Angeles. And now for the bad news: Like a lot of other things, a million bucks ain’t what it used to be.
One survey, released this week, showed that the number of millionaires in the United States reached an all-time high last year: 8.3 million households. And according to another survey, released last month, Los Angeles County has more millionaires -- 262,800 households, to be exact -- than any other county in the United States. (And, to answer the obvious question in this Era of the Real Estate Bubble: Neither survey included the value of the respondent’s primary residence in its calculations.)
Now, it’s hardly a shock that the place that includes Malibu, Rodeo Drive and endless ribbons of late-model, freeway-clogging German luxury automobiles has a lot of really, really rich residents. But Los Angeles’ rank in the yearly survey is a sign of its hugeness, not its fabulousness. Neighbors such as Orange County (ranked third with 113,299 households) and San Diego County (ranked fifth with 100,030) have greater concentrations of millionaires in their general population (3.8% and 3.4%, respectively, compared with L.A.’s 2.6%).
The community with the most millionaires per capita in the U.S., it turns out, is Los Alamos, N.M., a relatively modest spot best known as the home of government scientists. The median home price there barely topped $350,000 in 2005. And a full 20.4% of its residents are millionaires.
It’s Los Alamos, not Los Angeles, that tells the real story here. Thanks to the miracle known as compound interest, a moderate amount of money put aside each month in a 401(k) plan can grow, over decades, to $1 million. Most of the millionaire households identified in last month’s survey weren’t headed by Hollywood moguls or supermodels; they were run by people whose average age was 58 and whose average net worth was $2.2 million.
If anything, Angelenos’ glam accouterments are misleading. A million dollars doesn’t buy what it used to -- especially in Southern California, where the median home price recently just topped $500,000.
Sure, it’s better to have $1 million than, well, not. But, as Dr. Evil learned in “Austin Powers,” $1 million isn’t even enough to win the respect of your enemies anymore.
