Middle, Upper Middle Class Distinction for Retirees

[ShokWaveRider]

If you want to have some fun, try looking on realtor.com at what $400-$600K gets you in Orange County, CA. You would not want to live in one of those neighborhoods, unless you were willing to go with a one bedroom condo.

We used to live in MV, 13 years ago, sold at the peak and we owned our own home then. Similar homes now sell for $1.5m. So I hear you.

 

[Midpack]

I’m also in the who cares camp. I’ve always preferred to be underestimated, and I continue to strive for same. The Millionaire Next Door just reinforced my views. I know where we stand, that’s all I care about. If strangers think I’m no one special, all the better...

 

[W2R]

I was just trying to establish what Net worth would be needed to enjoy a "reasonable" standard of living based on one's individual requirements.

I guess I define what is a reasonable standard of living, independent of class structure.

To me and many others, class is based on a lot more than net worth or income; it also implies such elusive qualities as values, behaviors, education, and so on. If one defines class in this way, an upper class person in "difficult circumstances" might actually have a lower than average income and net worth. A lower class person who won the lottery might become nouveau riche rather than upper class.

So, leaving the discussion of class behind and getting back to income and net worth..... Here's what I think:

I already know that with my present income and net worth, I can afford what I feel is reasonable, here where I live. So, I immediately know that I can afford to live in areas with the same or lesser cost of living, but would have to think harder about areas with a greater COL if I wanted to move there. Personally I'm not willing to accept a lesser lifestyle anywhere, although some people might exchange a lesser lifestyle for location.

Try looking at websites like City Data , that will give you the median income and median home price for the region you have in mind. You can compare your own home price and income with others using this information. Another helpful website for comparing cost of living and determining how much you would need to live a similar lifestyle elsewhere, would be Sperling's Best Places.

 

[FANOFJESUS]

If you want to have some fun, try looking on realtor.com at what $400-$600K gets you in Orange County, CA. You would not want to live in one of those neighborhoods, unless you were willing to go with a one bedroom condo.

Pricey out there.

 

[Mulligan]

I just received an after tax $100 a month COLA last month and was notified yesterday, I am getting $200 additional monthly after tax from the recent tax cut. Since an additional $300 a month income gets me very excited, this clearly at the very best slots me no higher than middle middle class at best.

 

[exnavynuke]

If I have $100M and spend $30k/year, I'm not living an "upper middle class" lifestyle. If I have $500k and spend $100k/year, I'm probably living an "upper middle class" lifestyle.


What you are spending, imo, is a lot more important/telling than what you have to spend.

 

[ER Eddie]

I googled and found this:

Near Affluent $100k - $249k Investable Assets
Lower Mass Affluent ($250k - $499k) Investable Assets
Upper Mass Affluent: $500k - $999k Investable Assets

Those sound more like medical conditions than class distinctions. "Doctor, I have lower mass affluence. Please help me."

 

[Koogie]

I have aspirations of joining a different class.

The not Working Class.

 

[Lawrence of Suburbia]

Geography matters. I'm "Upper Mass Affluent"(!), which surprised me; but if I were to move to Marin County, I'd soon be living in my car.

 

[omni550]

The reason I brought this up is purely from a retirees quality of life perspective. It is hard to have such discussions with folk who do not enjoy the same standard of living as that of their more affluent friends.

I used "class" purely as it was used in most all of the articles I read today to differentiate between net worth levels.

Where am I going with this? Well in our area/general neighborhood, you need about $400-$600k to "buy" a home in a nice well run lower crime neighborhood within walking distance of the beach. The COL would require you to have about $45k pa. after tax to support a decent lifestyle. there are also multi $m homes too, but you can get a nice comfortable retirement location for the above. We consider ourselves to have an above average standard of living (for Florida).

Across the River, the homes go down to $200 - $350k. The crime is a little higher not much to note, is 10 - 15 - 20 miles from the beach, and the communities are a lot more varied. some homes are scruffier than others and there is not as much incentive to keep your lawn mown and home well maintained. Please do not get me wrong here, they at NOT bad areas, they are just not what we would consider for our own personal optimum retirement locations. They have more commercial activity very near the residential areas and as such have a lot more traffic.

Our personal preference is to live in our preferred location, and not be forever looking where the grass is greener. In order to afford such, ones net worth needs to be within the general classification of "Upper Middle Class", based on the data I reviewed.

I feel most comfortable living in neighborhoods where I don't feel too out-of-place. For me, it's less a function of people's NW, but more how they live their lives.

When assessing possible locations for my snowbird winter home, some nearby areas just felt bit "too rich for my blood" based on my personal observations. I still avail myself of the amenities, cultural offerings, etc. in those areas, I simply chose not to live there.

omni

 

[Lawrence of Suburbia]

Those sound more like medical conditions than class distinctions. "Doctor, I have lower mass affluence. Please help me."

Easily treatable with bran cereal, followed by hot coffee.

 

[Another Reader]

As near as I can tell from Google, one graduates from Upper Mass Affluent to High Net Worth, which somehow is associated with "Individual," at $1,000,000. Per Investopedia, one progresses from HNWI to "very HNWI" at $5,000,000 and "ultra HNWI" at $30,000,000.

These labels are created by and for banks and investment houses that have products and services to sell. They help target the customer.

ETA: For the OP's purpose, I think a paid for $500k house in the preferred neighborhood and $100k a year would allow the average person/couple to live well. No state income tax helps in Florida, although I understand other taxes are fairly high. How you put that income together will vary with your resources. Work down from there, estimating taxes, to figure out the minimum income you need to live reasonably well and not be worried about money.

 

[daylatedollarshort]

You can look to see where you are at on the Consumer Expenditure Tables, which also lists income:

https://www.bls.gov/cex/tables.htm

Neighborhoods in places like LA and SF can be pretty strange. We have original owner, elderly neighbors who bought their homes under $50K years ago and the homes are now falling into disrepair at one end of the income scale and at the other end lots of nice young yuppie couples with toddlers, babies, stock options, au pairs and luxury cars moving in for the schools, yoga studios, craft breweries and upscale markets. The latter are people who apparently don't mind paying $4 for a confetti colored eggplant instead of buying regular eggplants 2 for $1 at the discount grocers like I do, but they are helping raise our home price so we're happy to have them around.

 

[Gumby]

The young wife says I have no class.

 

[gerntz]

Geography matters. I'm "Upper Mass Affluent"(!), which surprised me; but if I were to move to Marin County, I'd soon be living in my car.

I disagree. That some choose to spend it largely on living location & others don't doesn't change the affluence level.

 

[Golden sunsets]

Out of pure curiosity what comes after “upper mass affluent”?

 

[gerntz]

Upper MC to me is when you it's not necessary for you to budget & you do what to want to do as far as interest go. If you wish to live in an expensive place, that's your primary interest being fulfilled.

 

[travelover]

I think that the government should set the definitions and then that information should be on your identification papers like driver's license and passport. Also, it would end any ambiguity. If you came into a little more money you could appeal for a higher classification.

 

[Ronstar]

I disagree. That some choose to spend it largely on living location & others don't doesn't change the affluence level.

Maybe not, but it certainly changes the perceived affluence level. And that is all that class is - one’s perception of how others live.

As I drive my rusted 2001 Acura through the streets of Scottsdale, Az, I get some condescending looks from the Bentley and Ferrari drivers -definitely appalled by my “lower class”. I don’t get the same looks at home in Illinois.

 

[samclem]

Here's how I would define "comfortable":
Home: 1800 sq ft (two-three people), structurally sound and not aesthetically objectionable inside or out, with all appliances working and all mechanical systems functional, including AC and heat. Located in a low-crime area (working definition: If you mistakenly leave the garage door open all night, you don't panic on noticing that in the morning or feel the need to inventory the contents. You can walk through your neighborhood any time day or night without significant risk of a becoming a crime victim). Where I live (southern Ohio), this costs about $1000-$1500/mo (incl utilities), or $12K- $18K per year.
Transportation: (a reliable and safe car, insurance, fuel and maintenance. For people in urban areas, it might be subway fare only, or include costs for parking a car 24-7). Where I live, this is about $500-$750/mo = $6k-$9K per year.
Groceries: About $150-$250/wk = $8K -13K per year.
Entertainment: Highly variable. Include cable TV, internet service, concert tickets, magazine subscriptions, hobbies, vacations of all types, etc. We could be content/not feel deprived if we spent $25K per year (but I think we spend more than that). I would bet most households in our relatively modest suburban neighborhood spend between $20K and $40K on these things.
Medical expenses/insurance: Highly variable. The BLS says the average family spends about $5K per year, so I'll use that.

So, to be comfortable (as defined above, where I live), a retired couple can expect to spend about $65K, with big differences up or down depending on how they want to spend their time. I don't know what "class" that is.

 

[MRG]

Call me whatever. As long as were comfy, secure, good health, and not w*rking I'm a wealthy person.

 

[mpeirce]

Upper Class "wealthy" - people who have full time staff (not just hire a once a week maid/lawn/pool guy).
Lower Class "poor" - people who live off government largess.
Middle Class - everyone else. Most people in the US are middle class.

 

[Teacher Terry]

I find it odd that people are describing a size of a home or yard in order to be considered middle class. Some people in the UMC choose to rent, in HCOL areas people may pay much more for smaller abodes or merely want to downsize. Some people don't want a big yard to care for.

 

[Surewhitey]

Apparently OP asked a hard / impossible question. Made me look around for the first time in a long time at various ways of looking at it. Here's my findings:

Average home in Dallas is $220k-ish; we live in one appx. twice that due to location, DD, crime. Old neighborhood, 1750 sq ft.

Our net worth (including the home) in the top 10% based on my findings. Nothing to write home about.

Our income last week, upper middle (barely); this week, upper as DW went back to corporate world...

Time of FIRE (likely 5 years) hoping to be in the top 5% (or better)

I'm one of the "if you have enough passive income and RE, you are in the upper middle to upper based on not needing to work and can make your assets create 10-20 years of income for RE. That's my personal opinion. I don't have a problem putting a label on it. Doesn't make me look differently at others, just a score keeper by nature and I always like to win...

Interestingly, I found an "average income by religion"...never knew such a thing was out there.

For what it's worth, I feel middle class all the way...

 

[frayne]

Don't know and don't care.