Are You In The Middle Class?

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middle class

In the United States, the economic inequity gap is widening between the upper-income households and everyone else. That’s a problem. Upper-income households make more money every year while middle-income and lower-income households stagnate. They are grabbing a bigger share of the nation’s aggregate income every year. Their net worth is also growing at a much more rapid pace than other households according to the Pew Research Center. This is a problem even if you’re one of those lucky upper-income households.

Does economic inequity really matter? Why should we care if we’re doing well financially? Well, economic inequity can lead to social unrest. A lot of people are angry because they feel like they’re left behind. Everyone’s quality of life decreases when so many families are suffering. I see more people struggling to get by every day and it’s a bit depressing.

Anyway, I was looking up my Social Security statement to update this post – How Early Retirement Impact Social Security Benefits. Our income was flat last year and I wonder if we’re in the middle class. Most people feel they are part of the middle class, but the middle class has been shrinking for many years now. Are we still in the middle class? I did a bit of research and found a couple of good online calculators to help us find the answer. Let’s check them out.

Middle class

The easiest way to determine if you’re in the middle class is to look at your household income. Pew Research has a really neat calculator. You can see where you are by location and the size of your household. I’ll run our info through it.

Middle class calculator at Pew Research.

Yay! We are middle class for our location. That’s not bad.

Demographic profile

The fun isn’t over yet. The calculator has a second part – compare yourself to others in your demographic profile.

Whoa! I’m not doing too well in my demography. We’re in the middle-income range, but most of my demographic peer group is in the upper income. Now, I feel like a C student and a terrible disappointment for my parents. We’re somewhere in the 39% middle. Actually, our household income is near the top of the middle-income range. From this, I can deduce that 52% of my peer group is doing better than we are. And about 48% is doing worse. We’re right in the meaty part of the grading curve. Sadly, a solid C student.

Middle class by net worth

Income is just one part of the equation. We need to look at the net worth too. I think that is a more accurate measure of your class. After all, I don’t think you’re upper class if your net worth isn’t up in the 1%.

Here is a net worth percentile by age calculator from DQYDJ.

We’re in the top 5% in our age range. That’s really good. I think that’s solid upper-middle class.

Middle class for now

So we’re still safely in the middle class. Our income and net worth are high enough to live a comfortable lifestyle for years to come. However, our income will drop precipitously when Mrs. RB40 retires. We’ll fall straight to the lower class if it’s all based solely on our income. Fortunately, our net worth should still be in the top 5%. The two factors balance out. Our passive income will enable us to maintain our lifestyle even with lower income.

Check out these two calculators and see if you’re in the middle class.

Back on inequity, I feel like we have been very fortunate and moved up in class over the years. Mrs. RB40 and I started out with nothing and now we’re in the top 5%. We consistently saved and invested to grow our wealth. Hopefully, our son can do the same. Although, I think life will be more difficult in the future.

Are you in the middle class? Do you think economic inequity is a big problem in the U.S.?

*Sign up for a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on our accounts. It’s a great site for DIY investors.

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Image credit: Julie Tupas

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

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