Middle, Upper Middle Class Distinction for Retirees

[Lawrence of Suburbia]

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

Cool, I'm moving to Sausalito!

 

[samclem]

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.

I don't know about "class", but it's true that some people prefer smaller places, or are willing to put up with them if other factors are more important. There are some amazing efficient small apartments, designed with a lot of thought and using top-shelf materials. Inside, they are more like the cabins of a luxury boat than a traditional homes--truly something to see. But, like a boat, you have to move this thing to get to that thing, or each space serves several functions, so you can choose to do one or the other, not both. Everything needs to be put away before starting something else. That's not objectionable to some people, but it's not something I'd be comfortable with.

Where I used to live (SoCal), nearly everyone in our neighborhood who worked spent at least 90 minutes on the road >each way< in their daily commute. They accepted it, nobody thought it was strange. It was just something they did. But, >to me< it is not something I'd be comfortable with--like living in a 500 sq ft apartment.

I'm glad we have choices.

 

[Red Badger]

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.

The answer is 34 feet. That is the height of the training towers at the US Army Airborne course and the US Army Air Assault course. A large study conducted in the 40's determined that soldiers who would jump off the 34' tower would jump from any height (there are occasional "passengers" who refuse to exit the bird, but it's rare).

 

[travelover]

Upper Class "wealthy" - people who have full time staff ..........

Geeze, by this definition my dog is Upper Class.

 

[jcretire77]

Very Funny and true.

 

[joeea]

I spent this morning looking around for some indication as to what designates if a retiree is Middle or Upper Middle class.

Why?

 

[Katsmeow]

In a sense it doesn't matter. But, I was actually thinking about this the other day. Class has a number of factors to it. Income is part of it, but so is education. Some activities are more tied to certain "classes" than others. Some of the people I know who say class doesn't matter are people who were raised in one class and stayed there. It can be different if you changed.

I was raised in the working class. I lived in a neighborhood where most people had good jobs that didn't require a college degree. When I went away to law school I was suddenly around people who grew up in a very different environment. And, yes, there was a gulf at times between what I knew and thought and what those around me knew and thought. There was a difference between middle class (what I had considered myself growing up) and upper middle class (what I felt everyone around me was when I was working).

When DH and I were working full time we had upper middle class incomes and lived in that type of neighborhood. Maybe because of my upbringing we always did some things that were more middle classy. I liked chain restaurants that some of the people I knew barely even knew existed.

But, now with DH retired and me working only a few hours a month it is different. Our income is definitely a middle class income. We have more assets, of course, than most people earning that income for a living.

We are planning to move soon and I have thought about this when moving. We want to downsize and want a less expensive home. We currently live in one of those upper middle class gated enclaves. So most of the people in the neighborhood probably have college degrees. A few may not who have incomes though that are higher than average.

But, I was looking at some houses where we plan to move. The area is very safe. That isn't an issue. It is close to amenities. Within a very short distance is a very high income area that we don't want to buy in because we don't want to spend that much money on a house. Back when we were working we would have done that.

So, this area I am looking at has some smaller houses (which we want) and is safe, etc. But, I looked at the demographics and it has a very middle income average income. Only 1% or so of the people have graduate degrees. It is very clearly a middle class area. And, I did wonder what it would be like. Would I fit in with the neighbors? I mean in terms of interests and stuff like that. It was very clear years ago that I didn't fit in that well with the part of my family that didn't go to college and stayed in the same/similar areas that I grew up in. I still loved them as family, but we had little to talk about once we got past family stuff. So, I do worry a bit about moving into an area where we may not have that much in common with neighbors.

That said, I don't want to pay to live in the kind of area I would have lived in 15 years ago.

 

[Independent]

"Class" is a poorly defined, much argued term.
"Income" is somewhat clearer.

This information comes from the Current Population Survey:

This is 2015 income for 65+ couples where neither is currently working and they have two people in the house. The first column is percentile breaks -- that is, 10% of these couples had income over $113,500, another 10% between $80,600 and $113,500, etc.

0.90 113,500
0.80 80,600
0.70 63,000
0.60 51,900
0.50 42,200
0.40 35,700
0.30 29,900
0.20 24,700
0.10 18,300

This is not spending, some people are spending from more than their income, some less.
The Census Bureau works at including non-periodic withdrawals from IRAs in these numbers, but they aren't perfect. I believe that IRS data would be a little higher.

http://www.early-retirement.org/forums/f28/fun-with-data-87063.html

 

[Red Badger]

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

High Mass - celebrated by Catholics on high holy days.

 

[mpeirce]

Geeze, by this definition my dog is Upper Class.

Definitely true for most pets these days. A true life of leisure.

There are still working (class) dogs and cats who have to hunt or herd, but these are now the minority.

 

[Nemo2]

There are still working (class) dogs and cats who have to hunt or herd, but these are now the minority.

And, ironically, often the most intelligent/astute.

 

[foxfirev5]

I have no idea what class I'm in. Are there perks when you reach the next level? Bonus miles? Cash back? Free TurboTax? Is there an official website?
I do know I enjoy associating with those at the lower end of the income spectrum. As long as I do not disclose anything financial. I've always considered myself upper low class. This was established by the time I was five. Frequently I'm mistaken for a landscaper, construction worker or maintenance man. When I go on vacation tourists often ask me directions since I blend in with the locals.&#55357;&#56832;

 

[Bamaman]

I would think we live an upper middle class lifestyle, on a peanut butter and jelly income. It is easier to be that way in The South where taxes and home prices are so reasonable.

I do have friends from college that were born to great wealtb. My college roommate lived in an antebellum mansion with a 300 acre manicured front yard. And I have friends that were very successful in business--flying Learjets and King Airs to their numerous homes.

But deep down inside them, they are just like me. They just have to worry about taxes, trust funds and working until age 70+ so their kids will have a place to work.

I left the workforce at 58 years old and we just enjoy life.

 

[Major Tom]

Good grief. We really love talking about this stuff don't we?

(Not a criticism; merely an observation.)

 

[Meadbh]

It’s interesting that the OP makes “class” distinctions based on wealth. In Europe, “class” has more to do with a way of life.

Wikipedia explains several methods of defining “middle class”.

https://en.m.wikipedia.org/wiki/Middle_class

My grandparents were “working class”. My parents moved up to the “middle class”. I have always seen myself as “middle class”. I have no desire to define it further. I feel comfortable associating with a broad range of friends, but will admit that I would feel a little out of place inviting billionaires or aristocracy to supper!

 

[aja8888]

Around here, if you can't speak with your lawn guy in his native tongue, you are middle class.

 

[btdt22]

I googled and found this:

https://phoenixmi.com/wp-content/up...et-Sizing-Update-and-Millionaires-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

OK let's say a married couple both worked 35 years and now each earns a $50K annual pension with COLA. They have also paid the max into SS and waited until 70 to take it. There net yearly income in retirement is now $180,000 per year plus they have free medical from pensions and medicare. It would take over $5 million to purchase a guaranteed lifetime COLA annuity to equal their $180k/year inflation adjusted income, yet these people rent, and by the above criteria have zero net worth, and are no way near affluent. I suspect a lot of retirees would love to have a guaranteed $15,000 per month for life, with COlA and free medical, versus being considered 'near affluent'?

 

[GravitySucks]

Geeze, by this definition my dog is Upper Class.

[emoji3][emoji3][emoji3]
My cat must be Aristocracy.

Put me in the Undeserving Poor Class with Alfred Doolittle.

 

[kcowan]

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.

I don't know about you, but I would be much more comfortable with $2.7m than $0.8 million! In fact, I doubt that we would live the same lifestyle.

 

[Gumby]

I recall someone once describing this board as "the lumpen slums of cyberspace".

 

[ShokWaveRider]

I find that the designation of Upper Mass Affluent to be $500k - 999k very hard to believe.

A conservative 3% return would be $30k pa., well below the Middle (avoiding the word class) spectrum based on income alone. 5% Return would be $50k just about, etc. etc..

So In Retirement income does not really cut it as a true measurement. Let us assume $0 return. $2m / 30 (years) = $66k a year to live on. Add a minimum return of 3% and now you approach what I consider to be Mass Affluent. This means That with say $500k for a home paid for, a NW of $2.5m is mass affluent. Add $25k of SS (Average). That is a good place to be. At least I think so.

So raw income does not really make for a good measurement for a Retiree. Hence my original comments and observations.

And for the record, I do not really care, but this morning was a little slow.

 

[travelover]

Good grief. We really love talking about this stuff don't we? ................

I think it is nostalgia for all the money we had just a few weeks ago.

 

[gayl]

We don't measure ourselves against others. The first paragraph of John Bogel's book "Enough" really says it all:

At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, “Yes, but I have something he will never have . . . Enough.”

We have enough. From that comes peace of mind.

I have enough to travel how / where I want, invest the excess, not worry about pullbacks, and not go into the office 40+ hours a week

 

[kcowan]

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.

It is probably because they identify you as a rust belt refugee! You could get by with a used BMW provided it has never seen snow and salt.

 

[kcowan]

I recall someone once describing this board as "the lumpen slums of cyberspace".

Yes. Help my memory. I think he might have been a writer? And this was his parting retort.

(We recently had a writer from Toronto, who made money by retiring at 34 and living of child assistance by having 7 children, interact with us on the Financial Wisdom Forum. His name is Derek Foster. The link is
Financial Writer Talks Turkey
and his screen name is stopwork.)