What is "Middle Class"?

[David1961]

I came across this article.

Middle class falls short on retirement funds - Yahoo! Finance

One thing that caught my attention is the following:

"Middle class is defined as those aged 30 to 69 with $40,000 to $100,000 in household income or $25,000 to $100,000 in investable assets and those aged 25 to 29 with income or investable assets of $25,000 to $100,000."

So does this mean if you are between 30 and 69 and have more than $100,000 in investable assets, you are not middle class? If so, what are you? Certainly not rich!

 

[travelover]

Just another generalized pot boiler article written to fill space .

 

[W2R]

I came across this article.

Middle class falls short on retirement funds - Yahoo! Finance

One thing that caught my attention is the following:

"Middle class is defined as those aged 30 to 69 with $40,000 to $100,000 in household income or $25,000 to $100,000 in investable assets and those aged 25 to 29 with income or investable assets of $25,000 to $100,000."

So does this mean if you are between 30 and 69 and have more than $100,000 in investable assets, you are not middle class? If so, what are you? Certainly not rich!

It must be a misprint. Surely they meant income of $25K-$100K from investments.

No, those with over $100K in investments are not rich! Maybe they are if their investment income is over $100K. And those who aren't working and have only $25K in investments are probably very poor, not middle class, if they have no other income.

 

[powerplay]

About a year or so ago I did some searching around on the net to try and find out what "middle class" meant and found no consistent definition of income or assets. The income range seemed to go from $30k to well over $200k depending on who was talking "middle class". I concluded that there is no clear criteria or agreement and the term is thrown around and means different numbers to different people.

 

[Leonidas]

The younger age exception I understand, but what happens when you turn 70? Are you drummed out of the middle class because you're too old?

I liked this quote:

The vast majority of respondents admitted they need help figuring out how much money they need to live on in retirement and picking investments for their 401(k)s. But in a negative twist for financial advisers, more than two-thirds said they were not willing to pay for this advice.
This puts more responsibility on employers to offer advice and planning tools through their workplace 401(k) plans, said Nordquist.
"If people aren't willing to pay for advice they are going to get a more vanilla approach to planning," she said. "But a simple plan is better than no plan."

 

[W2R]

About a year or so ago I did some searching around on the net to try and find out what "middle class" meant and found no consistent definition of income or assets. The income range seemed to go from $30k to well over $200k depending on who was talking "middle class". I concluded that there is no clear criteria or agreement and the term is thrown around and means different numbers to different people.

You know, after reading your post and thinking about it, I think that "middle class" is more of a mindset than a specific income level or net worth.

 

[ziggy29]

One of the problems with discussing how much money people have saved for retirement is that numbers like these rarely distinguish between those who will have pensions and those who don't. Someone who will receive a COLA'd pension that considerably exceeds their expenses may be fine with $0 saved for retirement. Those who have none, obviously not so much. Perhaps adding in the present cash value of vested pensions would provide a better apples to apples comparison.

 

[kyounge1956]

I came across this article.

Middle class falls short on retirement funds - Yahoo! Finance

One thing that caught my attention is the following:

"Middle class is defined as those aged 30 to 69 with $40,000 to $100,000 in household income or $25,000 to $100,000 in investable assets and those aged 25 to 29 with income or investable assets of $25,000 to $100,000."

So does this mean if you are between 30 and 69 and have more than $100,000 in investable assets, you are not middle class? If so, what are you? Certainly not rich!

Unless you've amassed half a million in assets you are not even "affluent".

 

[FinanceDude]

One of the problems with discussing how much money people have saved for retirement is that numbers like these rarely distinguish between those who will have pensions and those who don't. Someone who will receive a COLA'd pension that considerably exceeds their expenses may be fine with $0 saved for retirement. Those who have none, obviously not so much. Perhaps adding in the present cash value of vested pensions would provide a better apples to apples comparison.

That makes way too much sense, why would any good media person actually use common sense like that?

 

[Bestwifeever]

Middle class in terms of the social sciences historically has a more useful and interesting breakdown: http://www.encyclopedia.com/topic/Middle_class.aspx#3-1O88:middleclass-full

The numbers in the article are only Wells Fargo's definition of middle class (although it also uses the term "middle income" which is likely more accurate) for its report, whose aim is probably to get people to come to WF. The numbers imho are awfully low.

 

[aaronc879]

I came across this article.

Middle class falls short on retirement funds - Yahoo! Finance

One thing that caught my attention is the following:

"Middle class is defined as those aged 30 to 69 with $40,000 to $100,000 in household income or $25,000 to $100,000 in investable assets and those aged 25 to 29 with income or investable assets of $25,000 to $100,000."

So does this mean if you are between 30 and 69 and have more than $100,000 in investable assets, you are not middle class? If so, what are you? Certainly not rich!

I agree with the income part but not sure about the asset part as that seems too low. You don't need to be "rich" to be above middle class, you just need to be in the upper 1/3 of the population which most of us are.

 

[huusom]

Middle class are people who pay the most taxes, getting the least from tax cuts and receive no help from goverment entitlement programs.

 

[Fireup2020]

Do two "middle class" citizens living together now mean they are no longer "middle class" since together they exceed the dollar limits??

Why do I feel like "middle class" has negative connotations these days?

 

[jIMOh]

what is an average?
what was the median amount in the retirement accounts?
what is the amount in retirement accounts adjusted for expenses?

someone with 100k in a retirement account is in great shape if expenses are under 10k annually... where as if someone has 60k in annual expenses, they are in not good shape with same 100k.

 

[Tractor guy]

I think "middle class" is a term that is defined relative to your own position. Most everybody I've met that is working in the U.S. considers themselves middle class, even if their life style is upper crust. My definitions is: If you don't have to work and can buy anything you want, you're wealthy. If you have to work but can't find a job, then you are either poor or will be shortly. If you can't buy everything you want you're middle class.

My last job put me in a position to meet and socialize with several megacorp upper management who I considered "rich." They were high enough in the company that their salary and stock options were in the annual report. These were people who were taking home more than $1M/year in options.

I found that every one of them considered themselves "comfortable" and knew personally some one who was "rich." The guy who owned and raced a 10 year old Porsche on the weekend knew a rich man who owned 3 brand new factory prepared ones. The guy who used a company plane wasn't rich but knew a rich guy owned his own Lear jet, etc.

I've also seen some of the third world poor (beggars in the night markets in Cambodia and Thailand) and come the realization that anybody with a job in the U.S. is rich from their viewpoint.

Lorne

 

[FreqFlyer]

Middle Classs are people who earn what I earn. People who earn less are either struggling or lower middle class. People who make substantially more are affluent or wealthy.

I don't think you can generalize across such a large, diverse population. 47% of working people over 25 years of age earn less than $25K/year. That's an enormous population with, what seems to me, very little income.

75% (again, of working people above the age of 25) make under $50K.

 

[Gone4Good]

The answers people give to this question always amaze and confound me because they never seem to correspond to any objective definition of what it means to be "rich" or "middle class." For most people the definition for "rich" means someone who has, or makes, more than they do. The definition for "middle class" is most often "me."

Here's a graph I just put together from the census data that shows U.S. household income by percentile. The way to read this is that each bar represents the percentage of the population who makes less than that level of income. So for example, the "median" income, or the bar at the 50% mark, is for household income between $50,000-$54,000. That seems like a good definition for "middle class" as it truly represents the middle.

Other data points of interest, if your household earns between $90,000-$94,999, you earn more than 75% of your fellow citizens. If you make between $140,000-$144,999 you earn more than 90% of everyone else. And at $200K and above, you earn more than 96.2% of everyone else.

My definition would be that middle class means "middle" so around $50K +/-. And "rich" would mean top decile, so $140K and above. Regional difference probably skew this by a standard deviation, or so, but not by much more.

 

[Gone4Good]

If you can't buy everything you want you're middle class.

By that definition, everyone can be middle class. Suppose Bill Gates wants to own Australia, like Lex Luthor in Super Man II . . . does that make him middle class because he can't afford it?

 

[Gone4Good]

Middle Classs are people who earn what I earn. People who earn less are either struggling or lower middle class. People who make substantially more are affluent or wealthy.

That seems to be how it works.

 

[MasterBlaster]

The New York Times had a competition where they let the readers post their definition of what middle class is. Some of them are very clever.

Weekend Competition: Define Middle Class - Readers' Comments - NYTimes.com

Middle Class is like a counterfeit Louis Vuitton purse: the illusion of wealth built on a lot of plastic.

Middle class is a state of illusion that makes you think you are not and will never be poor, regardless of your lack of assets and your levels of debt...

The American Middle Class now are largely defined by the span of their middles.

 

[Alan]

What about the workers, mate?

DW and I were discussing this very subject this morning. On a news article on the radio they said "he grew up in a Middle Class family, his father drove a school bus". These days we never hear anything other than Middle Class, the Rich, and "Blue Collar" workers even though plenty of "Blue Collar" workers earn good money.

We decided that the Working Class has met its demise

 

[Bestwifeever]

So true, Alan. My father had a white collar civil service job and we were solidly working class and happy to be there.

Now no one wants to be called working class (except for the unemployed who wish they were in the working class).

 

[jIMOh]

lower class, according to the IRS, is people making 40k per year with 3 kids, or single people making about 20k per year.

Those are the (approximate) income levels for the EIC, which is defined as a tax credit for poor working families.

The rich by the IRS are defined at about 166k AGI, as that is when most deductions are phased out (or start to get phased out).

So my definition of middle class is everyone else- basically between 40k AGI and 166k AGI.

 

[Independent]

The Wells Fargo source is here: https://www.wellsfargo.com/press/2010/20101208_RetirementSurvey

 

[Rustic23]

To paraphrase: I don't know how to define it, but I know it when I see it!