Why Your Million-Dollar Net Worth Doesn't Actually Make You Wealthy

The year is 2025, and the U.S. has seen a record surge in millionaires — yet many of them don’t feel particularly rich. The gap between hitting seven figures and actually living a wealthy lifestyle has never been wider. According to financial experts, the problem isn’t the number itself; it’s what that number really represents.

The Illusion of Paper Wealth

Michael Benoit, a licensed insurance broker and founder of California Contractor Bond & Insurance Services, encounters this paradox daily. Business owners frequently come to him boasting about their millionaire status, only to reveal they’re struggling with cash flow.

“What we see is this: someone has $2 million in assets — maybe their business equipment, their real estate, their property — but that wealth is locked up,” Benoit explains. These individuals appear rich on paper, yet they’re constrained by substantial debt and tied-up capital. The irony? They’re asset-rich but cash-poor, which doesn’t actually feel like being rich.

The core issue is liquidity. Assets that can’t be quickly converted to cash are essentially financial anchors rather than wealth builders.

Age Changes Everything About What Millionaire Status Means

According to Joseph Favorito, a certified financial planner and managing partner at Landmark Wealth Management, context matters enormously. Your actual financial standing depends heavily on your age and how your wealth is structured.

Take a 25-year-old with $1 million in accessible, liquid investments. That person has achieved something extraordinary for their age group and should be positioned comfortably for life through compound growth and continued savings — assuming they remain disciplined.

Now contrast that with someone turning 65 with the same $1 million. Retirement planning research suggests a safe withdrawal rate of 4% annually, adjusted for inflation. That generates roughly $40,000 per year. For someone leaving the workforce, that’s often inadequate unless supplemented by pensions, Social Security, or other income streams.

The same million dollars tells two entirely different wealth stories depending on who holds it.

Redefining Wealth: It’s Not About Net Worth

Benoit pushes back against the conventional wisdom of chasing a high net worth figure. “True wealth is fundamentally different from net worth,” he states. “Real wealth means having sufficient liquidity and financial resilience.”

In practical terms, resilience means weathering emergencies. If someone owns a home valued at $1 million but has only $10,000 in savings, they’re one major crisis away from catastrophe. A lawsuit, a medical emergency, or unexpected business disruption could force them to sell their primary asset.

The real measure of financial security, Benoit suggests, is simpler and more revealing: How long can you survive without incoming income? This runway number — whether it’s three months or three years — better reflects actual wealth than any headline-grabbing asset total.

He recommends focusing less on what you’re worth on paper and more on building unencumbered assets. Stop fixating on inflated net worth calculations and instead ask yourself: How many months of full expenses can my liquid reserves actually cover right now?

That honest answer provides far more useful insight into whether you’re truly rich than any million-dollar label ever could.