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Middle, Upper Middle Class Distinction for Retirees
Old 02-11-2018, 09:17 AM   #1
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Middle, Upper Middle Class Distinction for Retirees

I spent this morning looking around for some indication as to what designates if a retiree is Middle or Upper Middle class. What I find is mostly based on income. But assuming a retiree does not have an income as such, and lives off His/Her Net worth invested to their desired allocation (That may generate income), begs the Net Worth question. I have a feeling some people think they are in the middle class demographic when in fact they are not or are in the Upper Middle Class Demographic.

From what I have managed to find from checking Google etc. is that those aged 55-64 with a net worth of between $843k and $2.8m put one in that category. I am asking here as most people in this group, I would think (Assumption) fall somewhere in that group or above. Let us also assume that include a paid off residence.

Is this a good indication of Upper Middle Class in the case of a retiree? I have also not included SS or Pensions as we do not take those yet and fall into the 55-64 demographic.

I would be interested in the opinions of folk here.
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Old 02-11-2018, 09:30 AM   #2
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Originally Posted by ShokWaveRider View Post
I would be interested in the opinions of folk here.
Well, since you asked . . .
Why does it make any difference if someone is "truly" MC or UMC?
The definitions are going to be all over the map, the distinction has zero practical consequences, and there's no generally recognized authority on what the definition of "class" is and what it means.

As a descriptive label, "class" has very little utility. If we want to know about net worth, income, education level, "old money" vs "new money", etc, then we need to ask about those things independently. Conglomerating them all together into "class" makes the exercise almost meaningless. "Class" seems to have value only to those trying to :
a) Keep score ("now I'm officially Upper Middle Class--and you aren't")
b) Make political points by subdividing the population into "them" and "us."


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Old 02-11-2018, 09:32 AM   #3
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I think you’re on the right track. I’d say a paid off home, SS, plus $750k investable assets is the lower end of upper middle class for living in the suburbs of most US cities. And I figure the higher end should be about $3.5M.

It’s hard to say because everyone has different needs and expenses. If one has a ne’er do well child, a million dollar nest egg can get sucked dry fast. And a bachelor with simple tastes can have everything he wants with just SS and maybe $200k worth of annuities or pension.
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Old 02-11-2018, 09:34 AM   #4
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Similarly, when people talk about "the 1%", I struggle with that a bit as the range of people in the 1% is something like $5M to $100B. Clearly those at the $5M level are in a completely different situation than the billionaires, so what's the point in lumping all of that into the 1% category. It's meaningless.
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Old 02-11-2018, 09:44 AM   #5
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I often feel that I've set my sights too high when I aspire to reach Lower Class.
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Old 02-11-2018, 09:48 AM   #6
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Similarly, when people talk about "the 1%", I struggle with that a bit as the range of people in the 1% is something like $5M to $100B. Clearly those at the $5M level are in a completely different situation than the billionaires, so what's the point in lumping all of that into the 1% category. It's meaningless.
Very, very true.
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Old 02-11-2018, 09:52 AM   #7
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Well, since you asked . . .
Why does it make any difference if someone is "truly" MC or UMC?
The definitions are going to be all over the map, the distinction has zero practical consequences, and there's no generally recognized authority on what the definition of "class" is and what it means.

As a descriptive label, "class" has very little utility. If we want to know about net worth, income, education level, "old money" vs "new money", etc, then we need to ask about those things independently. Conglomerating them all together into "class" makes the exercise almost meaningless. "Class" seems to have value only to those trying to :
a) Keep score ("now I'm officially Upper Middle Class--and you aren't")
b) Make political points by subdividing the population into "them" and "us."


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Mr Wet Blanket
Exactly right. Putting labels on people and classifying them just leads to biases and other problems, IMO.

What would you do with this info?
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Old 02-11-2018, 09:53 AM   #8
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Why would I care?
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Old 02-11-2018, 09:55 AM   #9
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In my mind, class doesn't have much to do with net worth. In terms of economics, any net worth or dollar value cutoff would be arbitrary and functionally fairly meaningless I would think given all the variables in play.
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Old 02-11-2018, 09:56 AM   #10
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I live in a 1700 foot house, drive a Honda, and can't afford one of those yachts with the helicopters on it. There's food on the table, and a bit in an emergency account. I'm middle class!

Not retired yet, but if I keep DH in check, we should be able to afford the same lifestyle in retirement. I see retirement in terms of sustainable income flow.

When I was a kid I asked my DF pretty much the same question. He said we were middle, middle, middle, class. Seems right to me.
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Old 02-11-2018, 10:01 AM   #11
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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.
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Old 02-11-2018, 10:05 AM   #12
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I look forward to being retired so I have time to think about such things that don't matter.
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Old 02-11-2018, 10:06 AM   #13
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Some of you folks seem to be taking this too personally. 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. The "class" label was used merely as a example in this case.

OK someone with a NW of $10m will have a different opinion than one with a NW of $3m. But for my purposes, I was using the $800 - $2.7m NW demographic.
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Old 02-11-2018, 10:08 AM   #14
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We consider ourselves to have an above average standard of living (for Florida). . .
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.
Crunch the numbers, and determine whether you can comfortably afford your preferred location?
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Old 02-11-2018, 10:09 AM   #15
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I never cared about reaching a "class" level, but my goal was always to get to the point where I just didn't have to worry about whether I had enough money to live my desired lifestyle. So I would just classify everyone in one of two categories - those who still worry about whether they have enough, and those who don't.
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Old 02-11-2018, 10:11 AM   #16
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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 think that's like asking "how far up is high"? It depends entirely on individual interpretation and it is unlikely my needs are the same as yours or any other poster here.
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Old 02-11-2018, 10:12 AM   #17
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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.
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.
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Old 02-11-2018, 10:13 AM   #18
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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.
You can either afford it or not, and choose to put your money into such a house or not. Assigning a class label just obfuscates the situation. If you run the numbers and decide you can afford it, and it's where you want to live, but it is deemed that you are not "upper middle class", are you going to pass on it?
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Old 02-11-2018, 10:13 AM   #19
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I would be interested in the opinions of folk here.
IMO, I look at what people spend as an indicator, not net worth.

Perhaps just take 3 or 4% of a retiree's portfolio as a substitute for income.
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Old 02-11-2018, 10:16 AM   #20
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I googled and found this:

https://phoenixmi.com/wp-content/upl...es-Ranking.pdf

The report uses the term affluent instead of middle class. Here is their cutoff for the different segments (on page 4 of report):

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

Investable Assets includes educational/custodial accounts, individually owned retirement accounts, stocks, options, bonds, mutual funds, managed accounts, hedge funds, structured products, ETFs, cash accounts, annuities, and cash value of life insurance policies
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