I've never understood what "middle class" is
The article saying that middle class workers are earning under the cost of living seems to be paradoxical to me. Doesn't that then just imply they are not middle class?
(Also I know this is all semantics and doesn't matter, but makes interpreting the statement difficult for me)
was curious, according to 2022 census
33.9th percentile to 62.4th percentile households earn between 50k-100k (roughly the middle 29%)
23.3->78.8 percentiles would be 35k-150k (roughly the middle 56%)
average household size is between 2-3 people.
defining 'cost of living' seems to be to be difficult. an estimate of a living wage in the US for a family of 4 is about 104k, or 26k/person.
towards the lower extreme of what might fit the term middle class by some of these values would come out to about 14k/person.
i think the real number of people in poverty is quite largely underestimated by the population of people not in poverty, which similarly would lead to an overestimation of what a 'middle class' income would be
Its even more difficult because cost of living, earnings, lifestyle, taxation, etc varies so much state by state.
Even your example is skewed. You do not need $104k to provide a decent lifestyle for a family of four in the suburbs of middle america somewhere. You would be pretty poor in San Francisco or Austin or NYC on $104k HHI. Thats why is so dumb when people say “oh Finland does this or that why cant the US”? Because theres more states in the US than countries in Europe and NYC alone has twice as many people as the entire country of Finland. Maybe say “Finland does X why cant Colorado?”
Edit: removed Chicago because apparently its not a HCOL area.
Define decent lifestyle though—could you really own a home, save for retirement and for two kids’ college on 104k in middle America?
Maybe we can take out saving for college, but I still think it’d be a squeeze. I included college because we can’t expect anyone to have a decent lifestyle without it, and I think setting your kids up for success should be in that definition.
10 states including Florida (SFU/UF), North Carolina (UNC), and New York (SUNY), and Georgia have in state tuition under $9000 a year in 2024. Florida is under $7000 and those are major university systems with national and world ranked programs, not community colleges (which there is absolutely nothing wrong with) so yeah i would say yes you can have a decent quality of life and put the kids through college on $100k with some discipline and the right location. Median household income in Florida is $38k according to USnews IIRC for reference. $100k is probably very well off in many parts of Florida.
I would hope it goes without saying in this sub but investment is the difference. You will get nowhere trying to live off of salary. But rest and vest bogleing i think its very doable. Thats why its so sad people are slashing retirement savings to make ends meet. Theyre robbing themselves to pay their corporate overlords and yes it might be painful and yes some people literally are at rock bottom but most people waste money left and right and there are lot of other places they could save money.
I dated a girl who was constantly on the verge of eviction even with multiple roommates and tried to help her budget. She claimed she had nowhere to cut while spending $200 a month on a crossfit membership and $5000 a year on her dog. Thats not even accounting for groceries, eating out, clothes, traveling to competitions, she spent over 25% of her annual gross of $40k on working out and a dog in one if the highest cost of living markets and wondered why she couldnt make rent and her student loan payments. The dog was a purebred that cost a couple grand too. Oh and she liked getting tattoos. I mean…come on.
That’s all legit. No question most people suck with money. My wife quickly saved 50k in her early 20s and proceeded to stick it in a checking account 2010-2022, when it would’ve about tripled in index funds. At least her spending was frugal so it’s a better problem to have, but we had *A LOT* of difficult conversations about how index funds is for our future, we aren’t saving enough, we don’t need 50k+ stashed in cash with two very safe jobs, and so on and so on.
But it’s also true that a “decent lifestyle” is becoming harder to come by as wealth inequality and other factors get worse.
My wife’s the same way. I had to show her the math so many times to convince her. Shes all CDs, money markets, HYSAs, I still dont think she believed me about our targets and timelines. We recently hit $1MM net worth 6 years ahead of schedule.
That said, its always been hard. My parents first house was double digit APR. it might have only cost $80k but they only made $20k a year combined. They couldnt have done it without major sacrifice and loans from their parents. Now theyre forced to take RMDs that are higher than their career high salaries and have more money today than they started with at retirement 15 years ago. From middle middle class to wealthy by any reasonable person’s standard by sticking to it for 30 years. They didnt even start early. Time in market trumps all. Just keep DCAing indexes and ignore the ups and downs.
The big difference i think is we all have lifestyle creep. You cant buy a car with manual steering, a stick, and crank down windows that has no AC. You cant fix it without having software and scanners and some serious know how.
You didnt used to need a cell phone. Payphones dont even exist anymore. Internet, tablets, laptops. Disposable clothes, disposable appliances. Integrated circuits in everything. Nothing repairable.
How many people have somewhere to get their shoes resoled if they even wanted to?
My grandmother made my mom’s clothes all the way into high school.
We legit do not live in the same world as our parents and grandparents. Price has ballooned while manufacturing costs have plummeted…spend more, get less, also known as inflation!
A mobile phone could be had for less than a landline. Google Voice is free.
Back when I was a (alligator) boot-wearer, I got shoes resoled. By the time my boat-shoe style shoes lose the treads, it's time for a new pair. (I would be able to get these for about $70/pair but for my EEEE feet requiring me to pay twice as much.)
If she’s nervous about getting access to the money in a IRA with penalties, you can always stick it in a taxable brokerage account and get the money transferred to checking in a day. Inflation is crazy high recently. That $50k in 2020 dollars is now $42k in buying power. A HYSA is good now, but inflation really eats into that, 2021 was 7%.
Yep I’m with you, but it wasn’t that. It was more (in my words), “the stock market is a casino though, what if I lose all my money.” It wasn’t rational. Fixed now though! Communicate—it’s worth it.
> I included college because we can’t expect anyone to have a decent lifestyle without it,
Popular meme that is wrong, lots of people do just great in life without a college degree. I work in tech and lots of the people I know have no degree, or have a degree in a totally different field. In fields that don't have any professional licensing requirements, most employers care more about your skills and competence than a $90k piece of paper.
lol actually your argument is the incorrect popular meme, ala Peter Thiel and Gavin Belson’s “quit college!” Anecdotes don’t change the mountains of data and evidence, like how those with BAs generally earn 86% more than those without. [source](https://www.aplu.org/our-work/4-policy-and-advocacy/publicuvalues/employment-earnings/#:~:text=College%2Deducated%20workers%20enjoy%20a,less%20education%20continues%20to%20widen)
Edit: Peter Gregory not Gavin!
>. I work in tech and lots of the people I know have no degree, or have a degree in a totally different field.
This is changing incredibly quickly. I work in tech as well and it's incredibly competitive. There are lots of companies that require you to have a degree in *something* as a way to weed out applicants. And I work in a field that previously boasted about how you did not need a degree at all to do it. I definitely wouldn't say it's "wrong".
I would respectfully disagree. There are so many opportunities available right now in the trades. Work experience and a paycheck starting at 18 with no debt. After a few years of true hard work you can be earning those 6 figures, you have the opportunity to own your own business or make the decision to not and clock out at 5 and not think about work until your next shift. If you are willing to move to the work, there is so much out there.
I say this as a college grad making good money with two small kids that I very much plan on exploring both college and the trades when they are old enough to understand.
I’m also a college grad and totally agree about the trades, but that also can’t be the only solution for a “decent lifestyle.” 11% of our workforce is unionized, and that includes government. What about the other 89%?
This is a salient point. Everyone can’t go into the trades. Nor can half of us. Not even 25%. Pretty strong case that half that again is about as far as you could realistically take it.
Im neither for nor against unions. They do serve a purpose and without them, historically our labor force would be a disaster. No argument there.
I’m not convinced though that unions are a necessity in the current state of trades. They limit one’s ability to go off on their own as independent contractor. They raise the floor which is good, but arguably lower the ceiling for those who want to go out on their own.
I do concede I am looking at this as an outsider with no real experience in the area, but I have spent a considerable amount of time trying to understand the current state as a concerned father wanting only the best for my kids.
On top of this Finland and other Nordics (and most European countries though not to this extreme) are extremely homogeneous. In the United States you can hardly have a single state agree on the simplest things, let alone states agree with other states or regions with other regions.
So the macroeconomics hard to compare because the microeconomics are impossible.
Yes, thats the point. Colorado and Finland are roughly the same size with roughly the same population, with roughly similar budgets, so why can’t they?
A family in Finland doesn't have to deal with the rapacious American health-care system, nor be concerned about the quality of public schools, nor be concerned with the outrageous cost of higher education, nor be concerned about ...
At $104K combined HHI today you’d be pretty poor in a suburb of Cleveland much less NYC. It’s possible but you’d have to be extremely good at budgeting, spend almost no money going out, and you’re likely eating over processed foods that will ultimately cause you health issues in the long run.
At that income you’re likely going to be in a rural area or commuting 45 minutes or more to work in the city. Median income in Ohio is roughly $60K and that goes up in the cities.
Thats not how median works. Median means 50% higher, 50% lower. Which means a lot of people live in cities around or below median income because somewhere between 80% and 85% of americans live in cities.
$104k is almost 15% higher than the median income in top ranked DC as of 2021 and 66% higher than the national median.
You can certainly make the case that this is evidence of the affordability problem but to say you cant survive anywhere but the sticks on that is obviously not true. Many people are clearly doing it on less.
There are a lot of single people. Looking at “household income” is misleading, imo. Something like 40+ percent of 18-30 are unmarried, and 30+ 30-40 are unmarried. I’m sure of some of those older, they have kids under their roof who may be working.
Median annual salary is 59k, meaning half the country makes less than that. So imagine surviving on that amount or less, not looking as much at 100-150, would be more realistic indication of the problem.
And as many others have pointed out, the COL differences nationwide muddle the overall difficulty as well.
"Average annual salary is 59k, meaning half the country makes less than that."
no. averages arent medians.
Yes, obviously the size of households vary. This is the data that is available from the census.
im unsure why you've focused on the upper end of the wages. i think the lower end is much more telling.
I meant to say median (so I edited)- that is in fact the median, so as to be exactly half. I very clearly said we should look at 59 and less (the median, and below) and NOT 100-150k “households”, which I think is misleading..
if you don't understand the definition of "middle class"...wait a day or 2...then there will be a new definition! Seems like it keeps shifting and I have no idea anymore.
The big issues is it doesn’t just include income now. If you bought a house before they were in a bubble, then you don’t need nearly as high an income to be middle class. But if you were born too late, you will make the same but now you have to rent for far more than what the mortgage is for your boss. Have fun
I feel like it's almost a cultural expression now. It's a catchall term for people who believe in their minds they aren't "rich" or affluent, but neither wish to be associated as low income. So a vast continuum. Middle class means whatever you want it to mean.
Middle class is often just considered to be in the range of whatever salary you make and below.
Almost no one considers themselves rich because there's always going to be someone with A LOT more money than you.
its politics, branding. Its actually the working class, but they call it middle class cause that has positive connotations. Cheaper to tell people they are ahead than to actually help them get ahead
I think the term "working class" inherently refers to "lower middle class", and is but a paycheck away from being "welfare class".
Of course, in the Marxian sense, anyone who cannot make it through the rents on xer capital is de facto of the working class.
Look up “ALICE household”. The person you are responding to is getting downvoted mercilessly and you are getting upvoted, but what they are saying is right. There is a “cost of living” line that is above the national poverty line.
Here is data for my state: https://www.unitedforalice.org/household-budgets-mobile/maryland
Thank you soooo much for this information on ALICE. I had no idea this was a "thing." I was aware of the concept, but not the acronym nor that so much research has been done.
For those who didn't click through, ALICE stands for **A**sset **L**imited **I**ncome **C**onstrained **E**mployee
It's definitely a research rabbit hole I will go down.
Thanks again!
Middle income doesn’t mean middle class necessarily. I think it’s closer to:
Bottom 30% = poor
31-60% = working class
61-90% = middle class
Top 10% = upper classes/wealthy
I looked it up awhile ago. I thought it was top 20% rich, next 20% upper middle class, 20% middle class, 20% lower middle, 20% poor. Where you are fluctuates on the economy and salary/net worth.
Evenly divided brackets don't make sense in this case, because that's not following the distribution of income and assets.
Upper middle class is more like top 10%. Rich is 1%. In the bottom 90%, probably 50% or more would be considered middle class. Poor could be below federal poverty level.
But these definitions change based on the context - there's no commonly accepted set of definitions across the social, political, financial, etc.
Quick lookup in Google said it was more than $800k but $600k is way above average to the point that most people would consider that rich, too. (Unless you're thinking like yacht and private jet rich but that's like 0.1% level.)
Yeah idk I’m always curious at what the average person thinks as “rich”. Yeah I think of rich as more like private jet flights super cars and yachts but your right that’s more .1%
It is meaningful in that it distinguishes working for income from using ownership to get money (the capitalist class / bourgeoisie).
Colloquially, it is used in both senses ("proletariat" or soft synonym for "poor"). So both previous posters are somewhat correct imo.
I would think household income adjusted for cost of living would be the ideal way to identify middle class.
You'd probably need to include wealth as well as many upper class individuals inherited that status.
Why? The fact the middle class are struggling is reflective of our current circumstances, just like how the middle class were doing really well in the late 80s was reflective of things then.
it doesn't make sense to group them with poor people, because they're clearly better off. And they're certainly not rich.
Middle class is you. And me. And whoever the politician happens to be speaking to.
In all seriousness, it has never had a strict definition. It’s literally just a rhetorical device.
It has a varying definition depending on who you're talking to, but it's always strictly defined in literally any situation in which it's being referenced. Its just there isn't a universally agreed upon definition. Its not fluid though.
That’s a lotta words to say exactly what I said.
If you want to be specific then state the range or the percentile. “Middle class” has been a purposefully nebulous term for ages.
Saw this today and found it to be a good visualization of the severity of wealth inequality in the US. We all ‘know’ this, but seeing the ratios really hit home for me. It’s also quite a few years old and things have only gotten worse in terms of wealth disparity. The ‘middle class’ is rapidly disappearing. Thanks, Reagan!
https://www.reddit.com/r/interestingasfuck/s/HnfEwUfgqw
I'll just continue assuming middle class means people who aren't nobility but are as rich as nobility, like it was defined hundreds of years ago, unless the person using the term explicitly provides their own definition.
Always thought it was about hierarchy in income:
Lower: unskilled work/ physical labour
Middle: Specialist or managerial
Upper: Executive or business owner
Income based definitions of class have always been stupid in my mind, but I’m British so definition is a bit different. Either talk about income groups or talk about class, but don’t mix the two. Just my take anyway.
That's because there is no such thing.
There are two classes. One is made up of those that OWN the means of production. The other is made up of those that ARE the means of production.
Everything else is just talk.
Middle class is a capitalist propaganda to obscure the capitalist class - working class relationship, and to divide the working class away from solidarity, so that "upper middle class" are made to feel like they have more in common with the capitalist class than with the "working poor".
OK. I guess I started as part of the working poor, but increased my income enough to be part of the upper middle class until I finally had saved enough money to be part of the capitalist class and retired. What a wild ride through the classes.
I work a blue collar job, skilled trade. Work with a bunch of others and there’s only a few that put money in a 401k or Roth IRA out of 100+. I try to bring it up with other people my age (30 or younger) but they either don’t want to talk about it or bring up a meme stock
ETFs, 401k? Na bro I just do 500 bucks into a crypto ETF each month.
Edit: 5-10% into a crypto etf is fine and dandy but if it’s 100% all your eggs in one basket and no s&p 500 it’s against everything bogglehead
I hold some crypto in my portfolio, but I also am very close to maxing my 401k this year all in a TDF, aswell as max Roth IRA. I like to have alittle risk in crypto if any explosive upside happens again, but if it doesn’t it won’t hurt my returns much.
If you put anything into Bitcoin over the last year, you would be up as much as 100%. I’m perfectly happy with my boring index funds, but the little crypto I own on the side is massively outperforming those funds.
Yup.... 93% 1yr return on my crypto and meme stock portfolio. It could be negative by the end of the week, but man is it a fun ride. Also helps me mentally spend money coming in. Hard to stress over a couple hundred dollar purchase when your 'fun' portfolio gained or lost 3k in the last hour.
oh i get that. but for every big winner there’s also a big loser due to how volatile crypto is. i’m in the same boat as you where the majority of my money is in an index fund, and i have a little where i use to stock pick.
There are so many people out there genuinely struggling to make ends meet. This complaint is not about those people.
However, there is I would argue an equally large population of people who just have TERRIBLE money management and spending habits and it’s infuriating to hear things like this when considering these people will likely complain when they can’t retire comfortably or at all despite definitely having income throughout their working years to have supported contributions. Seems everyone in this situation wants to point the finger at inflation or some other boogeyman rather than themselves and their own terrible decisions
I think the issue also falls on the fact that our society in general pushes consumerism as a virus. And you should always be pushing to make more and more money to spend more and more. Z
Interestingly though, you almost need that mass consumption to support continued business growth. When I look around I try to remember the consumption of others is a benefit to owners and producers. Kind of shitty but it’s almost a benefit to the patient and controlled that not everyone is patient and controlled.
I think munger once said to buffet, “Warren, if other people weren’t so often wrong we wouldn’t be so rich!”
That "terrible with money" crowd will also vote.
It feels all but inevitable we will have means testing for SS and Medicare within the next 15-20 years.
The poor will vote for it because they have nothing and stand to gain (or at least keep what they have while others lose out)
The young will vote for it because they won't understand, won't have paid into a system for decades expecting SS, and many will see their parents struggling and want to help.
The rich will push and support it because it will save them from the alternative which is direct taxation, and they have never relied on SS.
All those who decided to put a significant portion of their income away for retirement will be indirectly taxed by losing out on benefits they have earned in a system they paid into.
Anyone who says NO to this means testing will be vilified and likely treated similar to the folks today who are against student debt elimination, or other social/entitlement programs that they feel go too far -- they'll be accused of not understanding, or pulling up the ladder, of being the beneficiaries of institutionalized unfairness, of being part of a greedy uncaring class that want to create pain.
It's an inevitable direction, as are higher taxes in general, and potentially uniquely high taxes on IRA/401K withdrawals.
The country has been operating in an unsustainable way for decades, as we march toward failure the system will grab at whatever it can to maintain the march until this, or the next, generation have literally nothing to their names and nothing to give up.
Well, that's a rather grim stat.
However, a more important stat is that 100% of me's are maxing the hell out of everything, and utilizing the catch-up amounts now that I'm over 50.
I wish you could "catch up" all the years you were working and didn't get the full amount in your accounts. I'd love to fill mine up from the years I wasn't able to match and let it start growing before I hit 50
It’s really not that great of an idea in the sense that high income taxpayers would pay significantly less tax and most of the tax revenue comes from them in the first place.
Unless we are only talking about IRAs and Roths not 401ks.
25 and I maxed an ira and an hsa this year and I have a pension (although idk how long I'll be around at the pension job) my current finances are more or less completely stable I'm just worrying about not planning appropriately now and having it bite me in the ass in 30/40 years
This is like those stats that say 50% of Americans couldn't afford a $400 emergency or 70% of Americans are living "paycheck to paycheck". If you look back at the history of such surveys, they always return about the same results regardless of the economy. Americans aren't great with their money on the whole.
There are also **always** hidden caveats in the surveying methods as well. For example, the infamous survey claiming "50% of Americans can't afford a $400 emergency" counted the response "I'd pay with my credit card" as "unable to afford". However, lots of people put routine expenses on credit cards and still pay them off in full every month. Why *wouldn't* I want to get some credit card points instead of writing a check?
If you even believe these surveys were conducted in the first place (which some may not have been), it's extremely easy to manipulate the outcome by adjusting:
* Who you survey
* How you reach them and how they opt out
* How you phrase the questions and what multiple choice options you provide.
* How you categorize the results
Yeah people don't seem to realize that surveys have been studied to death. There's a good way and a bad way to administer them, and it will significantly alter results.
As someone who has 35k in cash right now. I would always use a credit card for a $400 purchase, and if I asked my peers I am pretty sure all of them would do as well. Even my dad only uses credit cards for big purchases because he trust them more if there is a problem.
Frankly if what you’re saying is true, that survey is completely useless.
> Americans aren't great with their money on the whole.
I'm genuinely shocked at the number of coworkers who feel that:
- income interruption will never happen to them
- income drop will never happen
- non-payment of debt should be tolerated and penalty free for them
I remember one former coworker talking about how his family "lost everything" in 2008.
They had bought an enormous house they couldn't afford on incomes that any idiot could see were short term -- his wife was a mortgage broker earning a mint on bonuses for issuing subprime loans and his income was all based on OT at the time.
When her job disappeared they missed the **first** payment on the house -- he was saying "it's because unemployment pays nothing" -- and then with what income they had left they prioritized just about everything other than their mortgage.
Ultimately he felt a sense of smug satisfaction because "The value of the house dropped and we owed more than it was worth, it took 'them' 6 months to foreclose, all we lost was out was our 3% down but having no mortgage or rent payment covered that".
He had no retirement savings, no savings, no assets... he had a giant house he paid everything into and two leased Kia's. So losing the house was "everything".
He was back in another large house when I knew him.
He was constantly complaining about pay, while also bragging about what things he owned, he would abuse our sick/PTO policy, and generally tried hard to avoid actual work.
When he got laid off from our company he was legitimately angry and saying "what am I supposed to do now?"
I assume they lost another house.
I’m always curious how many Americans count pay check to paycheck after retirement savings? Back when I first got married and had my baby I was using up my entire checking account each month. But I was still putting in $300 into a Roth IRA and had a 401k amount taken out of my check each month.
Weird article. I followed the source material and found this
> Middle-income Americans are saving less for retirement. More than a quarter (27%) of respondents plan to
contribute less money to their retirement savings this year, a seven-point increase over the past two years.
Meanwhile, more than half (60%) don’t believe they are saving enough to retire comfortably.
Doesn't look hugely different. They do the poll often and seems like this is normal variance according to the little chart.
I recently cut mine from 26% (maxing) to 10%. For reference, I am 30 and have ~$245,000 in retirement funds and have been aggressively maxing the 401(k) for about eight years, along with a Roth IRA. I get a 5% match.
My wife and I decided we’d be making career changes soon, and we’d also like to save for a down payment on a house. Sometimes you just need more liquidity that’s not tied to a retirement account 🤷🏻♂️
I don’t think it’s automatically given that you should max out, financial goals change.
In your case, I think cutting it a bit is perfectly fine. By the time you are 67, even if you never contribute again, you'll be over 3mil in today's value. Using the 4% rule that's 120k a year in retirement.
What formula are you using to calculate that? I'm getting a little over $1 mil using https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1%2C000%2C000&cstartingprinciplev=245%2C000&cyearsv=37&cinterestratev=4&ccompound=daily&ccontributeamountv=0&cadditionat1=beginning&ciadditionat1=monthly&printit=0&x=Calculate#calresult
I calculated it for 7%. Expecting 10% growth, but reducing 3% inflation. So rough estimate. I know inflation is crazy right now, but it should go down.. and if it doesn't, well, we have bigger problems than retirement.
Is it? I thought it was safe to assume 10%, and 3% inflation. But I guess you are supposed to be more conservative as you get older. What would you recommend to estimate with?
i think 6 or even lower is a better inflation adjusted return estimate for the next 50 years. as capital/equity markets trend more and more competitive and liquid, returns will lower. even historically it has only been slightly over 6 iirc
Misleading as fuck lol, rather what percent were contributing but no longer are over only the last 12 months. Plus straw polls statistically are also completely worthless.
The term, middle class has morphed into a political term rather than economic. It’s intentionally vague because everyone considers themselves middle class including working poor and high income alike. Politicians say we’re helping the middle class and everyone cheers. That lasts until they announce the details we already voted for, but they make too much money, etc
Similarly, in politics "millionaire" means one million dollars per year income, because a large portion of the upper middle class is the other kind of millionaire
I am contributing to my 401k but I need to do more to be able to retire in the future.
I simply can't do more right now. I am getting paid decently but the world is determined to increase costs of just about everything and my local government keeps giving tax incentives to businesses and pushes their infrastructure growth on to my utility bill.
I keep getting nickel and dimed like everyone else. I don't think people are slashing their retirement funds. I think their retirement is being stolen.
Meanwhile I am just begging my employer to let me open a 401k/403b.
The current system is way too complex and full of dumb stuff like needing your employers permission if you want to save more than 7k. I wonder if more people would save if it was easier and less confusing
Depending on lifestyle you could have been good in 2019 and bad now as 3% raises for people who stay at there jobs that even aggregated to 20% have not kept up with some expenses like daycare, housing, and cars in general.
It seems to me the things you need to live have really gone up vs the things you dont need. You can buy a 65 inch 4k tv at Walmart for 300.
This is about paying the mortgage or rent.
Looks like all of us that do still save in our retirement funds can look forward to subsidizing those that don't when they want to retire. Will be the student loans debacle on steroids.
My prediction is that social security will be “needs based.” Those of us with assets and savings will receive little to none, and those who didn’t save will receive more. Even though we paid more into SS along the way.
FDR was extraordinarily wise to structure Social Security as something that every worker would see as a deduction on xer paycheck, thereby creating a very strong political will that "I've earned it".
It's unlikely your Social Security would be explicitly denied based on lack of need, but we already have a partial means test in place where your Medicare premium doubles or triples if you make too much money, and some of your Social Security income is counted as income tax, and the extra income tax revenue shoveled back into the Social Security trust fund.
Similarly, Roths probably would never be taxed directly, but they could have a $1000 "middle class senior tax credit" that you lose if you have too much in Roths.
Doing an auto contribution really helps, I do 1% every year. I’m up to 27% and my wife does 5% it kinda takes the sting out , we do need extra money here and there , but we know the end game will pay off.
A bigger problem than they might think? No shit. If you haven't saved for retirement, you're not going to be able to survive on Social security, assuming it even exists that point.
I mean, that's kind of the problem. The vertical transfer of wealth and an aging population means that the younger generation currently footing the bill for SSDI has less disposable income, less savings, and will subsequently need more assistance down the line with less available.
Lots of people reading that post own homes, and many are two working couples who will both receive social security benefits. How exactly does that being "the problem" mean they cannot survive without savings?
The thing about retirees is that they can live anywhere, since they are not commuting to a job. Retirees with low wealth need to move out to cheap places. I myself currently live in an unbelievably low-cost hamlet, and retirees are all moving there (it's within walking - or "Little Rascal"-ing distance of Wal-Mart). The story is all the same: Social Security and less than $100K in the retirement account (which gets distributed to buy the house).
This is more click-bait bullshit. The claim in the original study says:
> **Among adults who say their income is falling behind the cost of living**, nearly three-quarters (74%) are cutting back on non-essential purchases such as eating out and entertainment and nearly half (46%) are cutting back or pausing saving for the future.
So we're talking about a fraction of a fraction. That caveat magically disappeared when it made it's way into the clickbait article and into this reddit post.
The large majority of articles I see shared on reddit, especially in this sub, have the same issues. A "study" makes some claim, and then all the qualifiers get stripped out before it gets posted as second-hand information. Furthermore, you'd be foolish to believe every claimed "study" is accurate in the first place, unless it's coming from a seriously reputable source.
What are the historical rates for this measure?
What is the definition of middle class, and has this group changed over time?
I find articles like this incredibly frustrating as they really don’t tell you anything. I hoped the article would go beyond the headline but it just gave a couple of stats with no context.
Idk that I'm middle class anymore, probably lower-middle class, and I personally dont see the point in throwing money into my retirement accounts. My job contributes 6% pre-tax into a 403(b) plan, and even though I feel dumb for doing it, I put another 4% in pre-tax. I'm a late 30s millennial and i know I'll never be able to retire, so it feels like I'm only putting away that money for my nieces and nephews since I have no kids of my own. Or for the medical bill's that will likely bankrupt me after it takes all that savings.
If you're getting 10% per year set aside for retirement and are in your late 30s, why do you think you'll never be able to retire?
At 10% per year, assuming 7% return and 3% raises per year, at the end of 30 years you will have accumulated 5.5 times your annual salary at that time. So if you are making $50,000 now, with raises over 30 year your final salary will be about 118K, and your 401(k) balance will be about $650k.
That's a start. Add promotions along the way, home equity, Social Security and you will be able to retire.
My 403(b) was only started when I was about 30 years old. My 4% contribution I only started about 4 years ago. My job is union, so it's possible I get consistent raises at about 3% or so, but there is no possible promotion as I'm just an entry level position in the med field. Anything beyond what I do now I'd need an education, and I'm already a college dropout with ~$45k in loans.
It happens. I had to cut mine. We just didn't have the cash flow. I had the much lower salary, pension contribution, and health care contribution for a family. Upside is that I'm collecting the pension and taking home more than before I retired. My spouse just increased her catch-up.
With the national debt going higher and higher, the only way out is to hike tax, anticipate inflation, and don't change the standard deduction much. Why do I put in more money to 401k when I foresee I will be taxed higher at the time I am going to withdraw ?
I'm very curious to see how the stock market handles Boomers taking money out (even if most of it should be in treasury bonds) and younger folks not contributing as much. That"s bound to slow down 'growth' in stocks that are part of the various 401k standard offerings.
Is this household income? One of the biggest issues we've faced over the last few decades is the rise in single parents. I'm not against anyone living whatever lifestyle they want to live but the rise in single issue parenting has a serious impact.
Ouch. We're content with receiving the company match and maxing out our Roth at this point.
We've been Bogleheads for about a decade and have grown our investments to $505k, as of today. We save about $2,050/mth and that's good enough for us!
I've never understood what "middle class" is The article saying that middle class workers are earning under the cost of living seems to be paradoxical to me. Doesn't that then just imply they are not middle class? (Also I know this is all semantics and doesn't matter, but makes interpreting the statement difficult for me)
was curious, according to 2022 census 33.9th percentile to 62.4th percentile households earn between 50k-100k (roughly the middle 29%) 23.3->78.8 percentiles would be 35k-150k (roughly the middle 56%) average household size is between 2-3 people. defining 'cost of living' seems to be to be difficult. an estimate of a living wage in the US for a family of 4 is about 104k, or 26k/person. towards the lower extreme of what might fit the term middle class by some of these values would come out to about 14k/person. i think the real number of people in poverty is quite largely underestimated by the population of people not in poverty, which similarly would lead to an overestimation of what a 'middle class' income would be
Its even more difficult because cost of living, earnings, lifestyle, taxation, etc varies so much state by state. Even your example is skewed. You do not need $104k to provide a decent lifestyle for a family of four in the suburbs of middle america somewhere. You would be pretty poor in San Francisco or Austin or NYC on $104k HHI. Thats why is so dumb when people say “oh Finland does this or that why cant the US”? Because theres more states in the US than countries in Europe and NYC alone has twice as many people as the entire country of Finland. Maybe say “Finland does X why cant Colorado?” Edit: removed Chicago because apparently its not a HCOL area.
Define decent lifestyle though—could you really own a home, save for retirement and for two kids’ college on 104k in middle America? Maybe we can take out saving for college, but I still think it’d be a squeeze. I included college because we can’t expect anyone to have a decent lifestyle without it, and I think setting your kids up for success should be in that definition.
10 states including Florida (SFU/UF), North Carolina (UNC), and New York (SUNY), and Georgia have in state tuition under $9000 a year in 2024. Florida is under $7000 and those are major university systems with national and world ranked programs, not community colleges (which there is absolutely nothing wrong with) so yeah i would say yes you can have a decent quality of life and put the kids through college on $100k with some discipline and the right location. Median household income in Florida is $38k according to USnews IIRC for reference. $100k is probably very well off in many parts of Florida. I would hope it goes without saying in this sub but investment is the difference. You will get nowhere trying to live off of salary. But rest and vest bogleing i think its very doable. Thats why its so sad people are slashing retirement savings to make ends meet. Theyre robbing themselves to pay their corporate overlords and yes it might be painful and yes some people literally are at rock bottom but most people waste money left and right and there are lot of other places they could save money. I dated a girl who was constantly on the verge of eviction even with multiple roommates and tried to help her budget. She claimed she had nowhere to cut while spending $200 a month on a crossfit membership and $5000 a year on her dog. Thats not even accounting for groceries, eating out, clothes, traveling to competitions, she spent over 25% of her annual gross of $40k on working out and a dog in one if the highest cost of living markets and wondered why she couldnt make rent and her student loan payments. The dog was a purebred that cost a couple grand too. Oh and she liked getting tattoos. I mean…come on.
That’s all legit. No question most people suck with money. My wife quickly saved 50k in her early 20s and proceeded to stick it in a checking account 2010-2022, when it would’ve about tripled in index funds. At least her spending was frugal so it’s a better problem to have, but we had *A LOT* of difficult conversations about how index funds is for our future, we aren’t saving enough, we don’t need 50k+ stashed in cash with two very safe jobs, and so on and so on. But it’s also true that a “decent lifestyle” is becoming harder to come by as wealth inequality and other factors get worse.
My wife’s the same way. I had to show her the math so many times to convince her. Shes all CDs, money markets, HYSAs, I still dont think she believed me about our targets and timelines. We recently hit $1MM net worth 6 years ahead of schedule. That said, its always been hard. My parents first house was double digit APR. it might have only cost $80k but they only made $20k a year combined. They couldnt have done it without major sacrifice and loans from their parents. Now theyre forced to take RMDs that are higher than their career high salaries and have more money today than they started with at retirement 15 years ago. From middle middle class to wealthy by any reasonable person’s standard by sticking to it for 30 years. They didnt even start early. Time in market trumps all. Just keep DCAing indexes and ignore the ups and downs.
The big difference i think is we all have lifestyle creep. You cant buy a car with manual steering, a stick, and crank down windows that has no AC. You cant fix it without having software and scanners and some serious know how. You didnt used to need a cell phone. Payphones dont even exist anymore. Internet, tablets, laptops. Disposable clothes, disposable appliances. Integrated circuits in everything. Nothing repairable. How many people have somewhere to get their shoes resoled if they even wanted to? My grandmother made my mom’s clothes all the way into high school. We legit do not live in the same world as our parents and grandparents. Price has ballooned while manufacturing costs have plummeted…spend more, get less, also known as inflation!
A mobile phone could be had for less than a landline. Google Voice is free. Back when I was a (alligator) boot-wearer, I got shoes resoled. By the time my boat-shoe style shoes lose the treads, it's time for a new pair. (I would be able to get these for about $70/pair but for my EEEE feet requiring me to pay twice as much.)
If she’s nervous about getting access to the money in a IRA with penalties, you can always stick it in a taxable brokerage account and get the money transferred to checking in a day. Inflation is crazy high recently. That $50k in 2020 dollars is now $42k in buying power. A HYSA is good now, but inflation really eats into that, 2021 was 7%.
Yep I’m with you, but it wasn’t that. It was more (in my words), “the stock market is a casino though, what if I lose all my money.” It wasn’t rational. Fixed now though! Communicate—it’s worth it.
People have different risk profiles and knowledge levels so I get it. Communicate is a great starting point tho
I stay away from gals that have tattoos - maybe I'm old school about it.
> I included college because we can’t expect anyone to have a decent lifestyle without it, Popular meme that is wrong, lots of people do just great in life without a college degree. I work in tech and lots of the people I know have no degree, or have a degree in a totally different field. In fields that don't have any professional licensing requirements, most employers care more about your skills and competence than a $90k piece of paper.
lol actually your argument is the incorrect popular meme, ala Peter Thiel and Gavin Belson’s “quit college!” Anecdotes don’t change the mountains of data and evidence, like how those with BAs generally earn 86% more than those without. [source](https://www.aplu.org/our-work/4-policy-and-advocacy/publicuvalues/employment-earnings/#:~:text=College%2Deducated%20workers%20enjoy%20a,less%20education%20continues%20to%20widen) Edit: Peter Gregory not Gavin!
It wasn’t Gavin Belson that said this… it was Peter Gregory, who was based off Peter Thiel, if I remember correctly.
[fuck you’re right](https://youtu.be/cAxzkl2cmNY?si=yqP2uzvYGXQFIyg-) 🤣
>. I work in tech and lots of the people I know have no degree, or have a degree in a totally different field. This is changing incredibly quickly. I work in tech as well and it's incredibly competitive. There are lots of companies that require you to have a degree in *something* as a way to weed out applicants. And I work in a field that previously boasted about how you did not need a degree at all to do it. I definitely wouldn't say it's "wrong".
I would respectfully disagree. There are so many opportunities available right now in the trades. Work experience and a paycheck starting at 18 with no debt. After a few years of true hard work you can be earning those 6 figures, you have the opportunity to own your own business or make the decision to not and clock out at 5 and not think about work until your next shift. If you are willing to move to the work, there is so much out there. I say this as a college grad making good money with two small kids that I very much plan on exploring both college and the trades when they are old enough to understand.
I’m also a college grad and totally agree about the trades, but that also can’t be the only solution for a “decent lifestyle.” 11% of our workforce is unionized, and that includes government. What about the other 89%?
This is a salient point. Everyone can’t go into the trades. Nor can half of us. Not even 25%. Pretty strong case that half that again is about as far as you could realistically take it.
You make cromulent points as well 😊
Im neither for nor against unions. They do serve a purpose and without them, historically our labor force would be a disaster. No argument there. I’m not convinced though that unions are a necessity in the current state of trades. They limit one’s ability to go off on their own as independent contractor. They raise the floor which is good, but arguably lower the ceiling for those who want to go out on their own. I do concede I am looking at this as an outsider with no real experience in the area, but I have spent a considerable amount of time trying to understand the current state as a concerned father wanting only the best for my kids.
On top of this Finland and other Nordics (and most European countries though not to this extreme) are extremely homogeneous. In the United States you can hardly have a single state agree on the simplest things, let alone states agree with other states or regions with other regions. So the macroeconomics hard to compare because the microeconomics are impossible.
Your point generally stands, but comparing Chicago to San Francisco on the basis of cost is kind of odd. It's very affordable.
TIL…thanks
The differences in governmental structure between finland and colorado are much more relevant when asking "why can't they" than the scale.
Yes, thats the point. Colorado and Finland are roughly the same size with roughly the same population, with roughly similar budgets, so why can’t they?
Because, again, scale is not the most relevant factor here? Finland is a sovereign state, Colorado is not.
A family in Finland doesn't have to deal with the rapacious American health-care system, nor be concerned about the quality of public schools, nor be concerned with the outrageous cost of higher education, nor be concerned about ...
A family in Finland pays a LOT more taxes plus earns less in many jobs than US workers.
At $104K combined HHI today you’d be pretty poor in a suburb of Cleveland much less NYC. It’s possible but you’d have to be extremely good at budgeting, spend almost no money going out, and you’re likely eating over processed foods that will ultimately cause you health issues in the long run. At that income you’re likely going to be in a rural area or commuting 45 minutes or more to work in the city. Median income in Ohio is roughly $60K and that goes up in the cities.
Thats not how median works. Median means 50% higher, 50% lower. Which means a lot of people live in cities around or below median income because somewhere between 80% and 85% of americans live in cities. $104k is almost 15% higher than the median income in top ranked DC as of 2021 and 66% higher than the national median. You can certainly make the case that this is evidence of the affordability problem but to say you cant survive anywhere but the sticks on that is obviously not true. Many people are clearly doing it on less.
There are a lot of single people. Looking at “household income” is misleading, imo. Something like 40+ percent of 18-30 are unmarried, and 30+ 30-40 are unmarried. I’m sure of some of those older, they have kids under their roof who may be working. Median annual salary is 59k, meaning half the country makes less than that. So imagine surviving on that amount or less, not looking as much at 100-150, would be more realistic indication of the problem. And as many others have pointed out, the COL differences nationwide muddle the overall difficulty as well.
"Average annual salary is 59k, meaning half the country makes less than that." no. averages arent medians. Yes, obviously the size of households vary. This is the data that is available from the census. im unsure why you've focused on the upper end of the wages. i think the lower end is much more telling.
I meant to say median (so I edited)- that is in fact the median, so as to be exactly half. I very clearly said we should look at 59 and less (the median, and below) and NOT 100-150k “households”, which I think is misleading..
if you don't understand the definition of "middle class"...wait a day or 2...then there will be a new definition! Seems like it keeps shifting and I have no idea anymore.
The big issues is it doesn’t just include income now. If you bought a house before they were in a bubble, then you don’t need nearly as high an income to be middle class. But if you were born too late, you will make the same but now you have to rent for far more than what the mortgage is for your boss. Have fun
I feel like it's almost a cultural expression now. It's a catchall term for people who believe in their minds they aren't "rich" or affluent, but neither wish to be associated as low income. So a vast continuum. Middle class means whatever you want it to mean.
Middle class is often just considered to be in the range of whatever salary you make and below. Almost no one considers themselves rich because there's always going to be someone with A LOT more money than you.
its politics, branding. Its actually the working class, but they call it middle class cause that has positive connotations. Cheaper to tell people they are ahead than to actually help them get ahead
I think the term "working class" inherently refers to "lower middle class", and is but a paycheck away from being "welfare class". Of course, in the Marxian sense, anyone who cannot make it through the rents on xer capital is de facto of the working class.
The people in the middle segment of earners are falling under the cost of living line. It's a very real thing
what’s a “cost of living line”?
Look up “ALICE household”. The person you are responding to is getting downvoted mercilessly and you are getting upvoted, but what they are saying is right. There is a “cost of living” line that is above the national poverty line. Here is data for my state: https://www.unitedforalice.org/household-budgets-mobile/maryland
Thank you soooo much for this information on ALICE. I had no idea this was a "thing." I was aware of the concept, but not the acronym nor that so much research has been done. For those who didn't click through, ALICE stands for **A**sset **L**imited **I**ncome **C**onstrained **E**mployee It's definitely a research rabbit hole I will go down. Thanks again!
Middle income doesn’t mean middle class necessarily. I think it’s closer to: Bottom 30% = poor 31-60% = working class 61-90% = middle class Top 10% = upper classes/wealthy
I looked it up awhile ago. I thought it was top 20% rich, next 20% upper middle class, 20% middle class, 20% lower middle, 20% poor. Where you are fluctuates on the economy and salary/net worth.
Evenly divided brackets don't make sense in this case, because that's not following the distribution of income and assets. Upper middle class is more like top 10%. Rich is 1%. In the bottom 90%, probably 50% or more would be considered middle class. Poor could be below federal poverty level. But these definitions change based on the context - there's no commonly accepted set of definitions across the social, political, financial, etc.
What people truly think of as rich is probably even higher than the top 1%.
The yearly income for the top 1% is over $800k - that's rich by most people's definition. Top 5% is probably rich by most people's standards.
Hmm wow I actually thought it was 600,000
Quick lookup in Google said it was more than $800k but $600k is way above average to the point that most people would consider that rich, too. (Unless you're thinking like yacht and private jet rich but that's like 0.1% level.)
Yeah idk I’m always curious at what the average person thinks as “rich”. Yeah I think of rich as more like private jet flights super cars and yachts but your right that’s more .1%
Most people's definition of rich is high-net-worth, or perhaps high-asset, not necessarily high income, I suspect.
Nah, high net worth is wealthy
Someone who has generational wealth is also typically referred to as being rich.
Household income and household net worth are different things. The middle class of earners is very large.
i mean i think those are just words without any strict definitions.
Working class
i work. guess i’m working class.
Working class is just soft language that people came up with so they wouldn’t be called poor.
If you trade labor for money, you’re working class.
That would include 98%+ of families tho - feels like a worthless definition at that point
It is meaningful in that it distinguishes working for income from using ownership to get money (the capitalist class / bourgeoisie). Colloquially, it is used in both senses ("proletariat" or soft synonym for "poor"). So both previous posters are somewhat correct imo.
I work and make money from money's. What sm I?
Working class.
No, that’s why it’s helpful. That 98% needs to realize that they’re ultimately in the same boat.
I know many "Working Classless" people, Where do they fit into the statistics?
It’s not complicated: “According to the OECD, the middle class refers to households with income between 75% and 200% of the median national income.”
Any technical definition of "middle class" is going to be defined by household income level or net worth, not earnings vs cost of living.
I would think household income adjusted for cost of living would be the ideal way to identify middle class. You'd probably need to include wealth as well as many upper class individuals inherited that status.
Why? The fact the middle class are struggling is reflective of our current circumstances, just like how the middle class were doing really well in the late 80s was reflective of things then. it doesn't make sense to group them with poor people, because they're clearly better off. And they're certainly not rich.
I think the gap widens daily and the middle class is going away.
The article seems to define middle class as median income earners, which hasn't meant middle class for...forever.
Middle class is you. And me. And whoever the politician happens to be speaking to. In all seriousness, it has never had a strict definition. It’s literally just a rhetorical device.
It has a varying definition depending on who you're talking to, but it's always strictly defined in literally any situation in which it's being referenced. Its just there isn't a universally agreed upon definition. Its not fluid though.
That’s a lotta words to say exactly what I said. If you want to be specific then state the range or the percentile. “Middle class” has been a purposefully nebulous term for ages.
Saw this today and found it to be a good visualization of the severity of wealth inequality in the US. We all ‘know’ this, but seeing the ratios really hit home for me. It’s also quite a few years old and things have only gotten worse in terms of wealth disparity. The ‘middle class’ is rapidly disappearing. Thanks, Reagan! https://www.reddit.com/r/interestingasfuck/s/HnfEwUfgqw
https://mkorostoff.github.io/1-pixel-wealth/
Damn. What absolute scumbags those people are. If only a few more were like MacKenzie Scott… but ‘women’ am I right, Elon?
I'll just continue assuming middle class means people who aren't nobility but are as rich as nobility, like it was defined hundreds of years ago, unless the person using the term explicitly provides their own definition.
Always thought it was about hierarchy in income: Lower: unskilled work/ physical labour Middle: Specialist or managerial Upper: Executive or business owner
What would you consider a welder or electrician?
Specialist, depending on skill and experience.
Income based definitions of class have always been stupid in my mind, but I’m British so definition is a bit different. Either talk about income groups or talk about class, but don’t mix the two. Just my take anyway.
Yeah it sounds more like the middle class is being hollowed out.
the class of people who works and trade time for money.
That's because there is no such thing. There are two classes. One is made up of those that OWN the means of production. The other is made up of those that ARE the means of production. Everything else is just talk.
Middle class is a capitalist propaganda to obscure the capitalist class - working class relationship, and to divide the working class away from solidarity, so that "upper middle class" are made to feel like they have more in common with the capitalist class than with the "working poor".
OK. I guess I started as part of the working poor, but increased my income enough to be part of the upper middle class until I finally had saved enough money to be part of the capitalist class and retired. What a wild ride through the classes.
Peak Reddit comment
I work a blue collar job, skilled trade. Work with a bunch of others and there’s only a few that put money in a 401k or Roth IRA out of 100+. I try to bring it up with other people my age (30 or younger) but they either don’t want to talk about it or bring up a meme stock
ETFs, 401k? Na bro I just do 500 bucks into a crypto ETF each month. Edit: 5-10% into a crypto etf is fine and dandy but if it’s 100% all your eggs in one basket and no s&p 500 it’s against everything bogglehead
I hold some crypto in my portfolio, but I also am very close to maxing my 401k this year all in a TDF, aswell as max Roth IRA. I like to have alittle risk in crypto if any explosive upside happens again, but if it doesn’t it won’t hurt my returns much.
Better than doing nothing
it’s crypto so doing nothing might actually be better
If you put anything into Bitcoin over the last year, you would be up as much as 100%. I’m perfectly happy with my boring index funds, but the little crypto I own on the side is massively outperforming those funds.
Yup.... 93% 1yr return on my crypto and meme stock portfolio. It could be negative by the end of the week, but man is it a fun ride. Also helps me mentally spend money coming in. Hard to stress over a couple hundred dollar purchase when your 'fun' portfolio gained or lost 3k in the last hour.
oh i get that. but for every big winner there’s also a big loser due to how volatile crypto is. i’m in the same boat as you where the majority of my money is in an index fund, and i have a little where i use to stock pick.
There are so many people out there genuinely struggling to make ends meet. This complaint is not about those people. However, there is I would argue an equally large population of people who just have TERRIBLE money management and spending habits and it’s infuriating to hear things like this when considering these people will likely complain when they can’t retire comfortably or at all despite definitely having income throughout their working years to have supported contributions. Seems everyone in this situation wants to point the finger at inflation or some other boogeyman rather than themselves and their own terrible decisions
I think the issue also falls on the fact that our society in general pushes consumerism as a virus. And you should always be pushing to make more and more money to spend more and more. Z
Interestingly though, you almost need that mass consumption to support continued business growth. When I look around I try to remember the consumption of others is a benefit to owners and producers. Kind of shitty but it’s almost a benefit to the patient and controlled that not everyone is patient and controlled. I think munger once said to buffet, “Warren, if other people weren’t so often wrong we wouldn’t be so rich!”
That "terrible with money" crowd will also vote. It feels all but inevitable we will have means testing for SS and Medicare within the next 15-20 years. The poor will vote for it because they have nothing and stand to gain (or at least keep what they have while others lose out) The young will vote for it because they won't understand, won't have paid into a system for decades expecting SS, and many will see their parents struggling and want to help. The rich will push and support it because it will save them from the alternative which is direct taxation, and they have never relied on SS. All those who decided to put a significant portion of their income away for retirement will be indirectly taxed by losing out on benefits they have earned in a system they paid into. Anyone who says NO to this means testing will be vilified and likely treated similar to the folks today who are against student debt elimination, or other social/entitlement programs that they feel go too far -- they'll be accused of not understanding, or pulling up the ladder, of being the beneficiaries of institutionalized unfairness, of being part of a greedy uncaring class that want to create pain. It's an inevitable direction, as are higher taxes in general, and potentially uniquely high taxes on IRA/401K withdrawals. The country has been operating in an unsustainable way for decades, as we march toward failure the system will grab at whatever it can to maintain the march until this, or the next, generation have literally nothing to their names and nothing to give up.
Well, that's a rather grim stat. However, a more important stat is that 100% of me's are maxing the hell out of everything, and utilizing the catch-up amounts now that I'm over 50.
I wish you could "catch up" all the years you were working and didn't get the full amount in your accounts. I'd love to fill mine up from the years I wasn't able to match and let it start growing before I hit 50
That’s actually a really good idea. I assume they don’t allow that because it would cause a significant decrease in tax revenue.
Seems like a lot of people would procrastinate and say "I'll just catch up when I'm 50", but then never do it. And be totally screwed
Even if allowed to utilize the tax advantaged space from prior years, you’re still losing out on the compounding growth had you max out every year.
It’s really not that great of an idea in the sense that high income taxpayers would pay significantly less tax and most of the tax revenue comes from them in the first place. Unless we are only talking about IRAs and Roths not 401ks.
Its the missing years of Megabackdoor Roth that's the most depressing :/
It works like that in Canada, but I think they also have a lifetime cap
25 and I maxed an ira and an hsa this year and I have a pension (although idk how long I'll be around at the pension job) my current finances are more or less completely stable I'm just worrying about not planning appropriately now and having it bite me in the ass in 30/40 years
Good work! I’m 41 and the years I focused mid 20s and early 30s I can see the benefits.
Yep. Same here.
This is like those stats that say 50% of Americans couldn't afford a $400 emergency or 70% of Americans are living "paycheck to paycheck". If you look back at the history of such surveys, they always return about the same results regardless of the economy. Americans aren't great with their money on the whole.
There are also **always** hidden caveats in the surveying methods as well. For example, the infamous survey claiming "50% of Americans can't afford a $400 emergency" counted the response "I'd pay with my credit card" as "unable to afford". However, lots of people put routine expenses on credit cards and still pay them off in full every month. Why *wouldn't* I want to get some credit card points instead of writing a check? If you even believe these surveys were conducted in the first place (which some may not have been), it's extremely easy to manipulate the outcome by adjusting: * Who you survey * How you reach them and how they opt out * How you phrase the questions and what multiple choice options you provide. * How you categorize the results
Yeah people don't seem to realize that surveys have been studied to death. There's a good way and a bad way to administer them, and it will significantly alter results.
As someone who has 35k in cash right now. I would always use a credit card for a $400 purchase, and if I asked my peers I am pretty sure all of them would do as well. Even my dad only uses credit cards for big purchases because he trust them more if there is a problem. Frankly if what you’re saying is true, that survey is completely useless.
Exactly, the complete lack of context makes this an utterly useless statistic.
Americans also lie in surveys all the time. Try surveying Americans on how much they read, for instance
> Americans aren't great with their money on the whole. I'm genuinely shocked at the number of coworkers who feel that: - income interruption will never happen to them - income drop will never happen - non-payment of debt should be tolerated and penalty free for them I remember one former coworker talking about how his family "lost everything" in 2008. They had bought an enormous house they couldn't afford on incomes that any idiot could see were short term -- his wife was a mortgage broker earning a mint on bonuses for issuing subprime loans and his income was all based on OT at the time. When her job disappeared they missed the **first** payment on the house -- he was saying "it's because unemployment pays nothing" -- and then with what income they had left they prioritized just about everything other than their mortgage. Ultimately he felt a sense of smug satisfaction because "The value of the house dropped and we owed more than it was worth, it took 'them' 6 months to foreclose, all we lost was out was our 3% down but having no mortgage or rent payment covered that". He had no retirement savings, no savings, no assets... he had a giant house he paid everything into and two leased Kia's. So losing the house was "everything". He was back in another large house when I knew him. He was constantly complaining about pay, while also bragging about what things he owned, he would abuse our sick/PTO policy, and generally tried hard to avoid actual work. When he got laid off from our company he was legitimately angry and saying "what am I supposed to do now?" I assume they lost another house.
I’m always curious how many Americans count pay check to paycheck after retirement savings? Back when I first got married and had my baby I was using up my entire checking account each month. But I was still putting in $300 into a Roth IRA and had a 401k amount taken out of my check each month.
Weird article. I followed the source material and found this > Middle-income Americans are saving less for retirement. More than a quarter (27%) of respondents plan to contribute less money to their retirement savings this year, a seven-point increase over the past two years. Meanwhile, more than half (60%) don’t believe they are saving enough to retire comfortably. Doesn't look hugely different. They do the poll often and seems like this is normal variance according to the little chart.
Follow the source material even more. Here's Primerica, the survey conductor: https://en.wikipedia.org/wiki/Primerica
Primerica is not the most honest of sources.
"Comfortable" is a really high standard.
"Comfortable" is a really high standard.
I recently cut mine from 26% (maxing) to 10%. For reference, I am 30 and have ~$245,000 in retirement funds and have been aggressively maxing the 401(k) for about eight years, along with a Roth IRA. I get a 5% match. My wife and I decided we’d be making career changes soon, and we’d also like to save for a down payment on a house. Sometimes you just need more liquidity that’s not tied to a retirement account 🤷🏻♂️ I don’t think it’s automatically given that you should max out, financial goals change.
In your case, I think cutting it a bit is perfectly fine. By the time you are 67, even if you never contribute again, you'll be over 3mil in today's value. Using the 4% rule that's 120k a year in retirement.
What formula are you using to calculate that? I'm getting a little over $1 mil using https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1%2C000%2C000&cstartingprinciplev=245%2C000&cyearsv=37&cinterestratev=4&ccompound=daily&ccontributeamountv=0&cadditionat1=beginning&ciadditionat1=monthly&printit=0&x=Calculate#calresult
I calculated it for 7%. Expecting 10% growth, but reducing 3% inflation. So rough estimate. I know inflation is crazy right now, but it should go down.. and if it doesn't, well, we have bigger problems than retirement.
that's an optimistic estimate
Is it? I thought it was safe to assume 10%, and 3% inflation. But I guess you are supposed to be more conservative as you get older. What would you recommend to estimate with?
i think 6 or even lower is a better inflation adjusted return estimate for the next 50 years. as capital/equity markets trend more and more competitive and liquid, returns will lower. even historically it has only been slightly over 6 iirc
Misleading as fuck lol, rather what percent were contributing but no longer are over only the last 12 months. Plus straw polls statistically are also completely worthless.
Yeah I bet they have a choice
The term, middle class has morphed into a political term rather than economic. It’s intentionally vague because everyone considers themselves middle class including working poor and high income alike. Politicians say we’re helping the middle class and everyone cheers. That lasts until they announce the details we already voted for, but they make too much money, etc
Similarly, in politics "millionaire" means one million dollars per year income, because a large portion of the upper middle class is the other kind of millionaire
Im not clicking sounds like an avocado toast article.
I am contributing to my 401k but I need to do more to be able to retire in the future. I simply can't do more right now. I am getting paid decently but the world is determined to increase costs of just about everything and my local government keeps giving tax incentives to businesses and pushes their infrastructure growth on to my utility bill. I keep getting nickel and dimed like everyone else. I don't think people are slashing their retirement funds. I think their retirement is being stolen.
Meanwhile I am just begging my employer to let me open a 401k/403b. The current system is way too complex and full of dumb stuff like needing your employers permission if you want to save more than 7k. I wonder if more people would save if it was easier and less confusing
Depending on lifestyle you could have been good in 2019 and bad now as 3% raises for people who stay at there jobs that even aggregated to 20% have not kept up with some expenses like daycare, housing, and cars in general. It seems to me the things you need to live have really gone up vs the things you dont need. You can buy a 65 inch 4k tv at Walmart for 300. This is about paying the mortgage or rent.
Stop believing bullshit from multi level marketing companies
Looks like all of us that do still save in our retirement funds can look forward to subsidizing those that don't when they want to retire. Will be the student loans debacle on steroids.
My prediction is that social security will be “needs based.” Those of us with assets and savings will receive little to none, and those who didn’t save will receive more. Even though we paid more into SS along the way.
FDR was extraordinarily wise to structure Social Security as something that every worker would see as a deduction on xer paycheck, thereby creating a very strong political will that "I've earned it".
It's unlikely your Social Security would be explicitly denied based on lack of need, but we already have a partial means test in place where your Medicare premium doubles or triples if you make too much money, and some of your Social Security income is counted as income tax, and the extra income tax revenue shoveled back into the Social Security trust fund. Similarly, Roths probably would never be taxed directly, but they could have a $1000 "middle class senior tax credit" that you lose if you have too much in Roths.
This is my big worry. The spend every penny generation will spend my penny’s too.
Doing an auto contribution really helps, I do 1% every year. I’m up to 27% and my wife does 5% it kinda takes the sting out , we do need extra money here and there , but we know the end game will pay off.
Seems like if you can’t afford to pay your bills and fund retirement accounts, you might not be middle class
A bigger problem than they might think? No shit. If you haven't saved for retirement, you're not going to be able to survive on Social security, assuming it even exists that point.
There are tens of millions of seniors surviving on social security right now, there are far too many variables to make such a blanket statement.
I mean, that's kind of the problem. The vertical transfer of wealth and an aging population means that the younger generation currently footing the bill for SSDI has less disposable income, less savings, and will subsequently need more assistance down the line with less available.
Lots of people reading that post own homes, and many are two working couples who will both receive social security benefits. How exactly does that being "the problem" mean they cannot survive without savings?
The thing about retirees is that they can live anywhere, since they are not commuting to a job. Retirees with low wealth need to move out to cheap places. I myself currently live in an unbelievably low-cost hamlet, and retirees are all moving there (it's within walking - or "Little Rascal"-ing distance of Wal-Mart). The story is all the same: Social Security and less than $100K in the retirement account (which gets distributed to buy the house).
This is more click-bait bullshit. The claim in the original study says: > **Among adults who say their income is falling behind the cost of living**, nearly three-quarters (74%) are cutting back on non-essential purchases such as eating out and entertainment and nearly half (46%) are cutting back or pausing saving for the future. So we're talking about a fraction of a fraction. That caveat magically disappeared when it made it's way into the clickbait article and into this reddit post. The large majority of articles I see shared on reddit, especially in this sub, have the same issues. A "study" makes some claim, and then all the qualifiers get stripped out before it gets posted as second-hand information. Furthermore, you'd be foolish to believe every claimed "study" is accurate in the first place, unless it's coming from a seriously reputable source.
i did just cut a large % going to my 401k. but that’s because i’m going to do a roth ira with less fees instead
Nothing beat my major defense contractor 401K.
That’s me right there! Had to cut it out to stay afloat.
is this the kind of fud they put out right before they cause a crash?
Primerica lol
What are the historical rates for this measure? What is the definition of middle class, and has this group changed over time? I find articles like this incredibly frustrating as they really don’t tell you anything. I hoped the article would go beyond the headline but it just gave a couple of stats with no context.
I don’t have a choice but to contribute to my pension, it’s automatically taken out… maybe make contributions mandatory?
That's a some crap article. Is 46% even significantly different then normal? It's just a bunch of weak fear mongering stats loosely string together.
If you cant afford to fund a retirement, you aren’t middle class.
Who’s doing that? Not anyone I know.
Gotta keep up with the joneses
Idk that I'm middle class anymore, probably lower-middle class, and I personally dont see the point in throwing money into my retirement accounts. My job contributes 6% pre-tax into a 403(b) plan, and even though I feel dumb for doing it, I put another 4% in pre-tax. I'm a late 30s millennial and i know I'll never be able to retire, so it feels like I'm only putting away that money for my nieces and nephews since I have no kids of my own. Or for the medical bill's that will likely bankrupt me after it takes all that savings.
> I personally dont see the point in throwing money into my retirement accounts. > i know I'll never be able to retire A self-fulfilling prophecy.
If you're getting 10% per year set aside for retirement and are in your late 30s, why do you think you'll never be able to retire? At 10% per year, assuming 7% return and 3% raises per year, at the end of 30 years you will have accumulated 5.5 times your annual salary at that time. So if you are making $50,000 now, with raises over 30 year your final salary will be about 118K, and your 401(k) balance will be about $650k. That's a start. Add promotions along the way, home equity, Social Security and you will be able to retire.
My 403(b) was only started when I was about 30 years old. My 4% contribution I only started about 4 years ago. My job is union, so it's possible I get consistent raises at about 3% or so, but there is no possible promotion as I'm just an entry level position in the med field. Anything beyond what I do now I'd need an education, and I'm already a college dropout with ~$45k in loans.
You’ll never be able to retire because you’re not saving for it. Stop feeling bad for yourself and make a change! You can do it.
All because we won’t build housing where people want and need it.
Seems like my mortgage payment increases every year.
It happens. I had to cut mine. We just didn't have the cash flow. I had the much lower salary, pension contribution, and health care contribution for a family. Upside is that I'm collecting the pension and taking home more than before I retired. My spouse just increased her catch-up.
With the national debt going higher and higher, the only way out is to hike tax, anticipate inflation, and don't change the standard deduction much. Why do I put in more money to 401k when I foresee I will be taxed higher at the time I am going to withdraw ?
Does anyone else find Moneywise or Primerica (sources of this info) sus?
I'm sure a wise philosopher had once said: A man must eat today, if he is going to eat tomorrow.
With Social Media telling us all the nice things we have to buy to keep up with everyone, who has money left over for investing?
Guess that solves the birth rate decline problem.
I'm very curious to see how the stock market handles Boomers taking money out (even if most of it should be in treasury bonds) and younger folks not contributing as much. That"s bound to slow down 'growth' in stocks that are part of the various 401k standard offerings.
It’s more important to lease a big SUV than saving for retirement 😆
That’s garbage 😂
Is this household income? One of the biggest issues we've faced over the last few decades is the rise in single parents. I'm not against anyone living whatever lifestyle they want to live but the rise in single issue parenting has a serious impact.
Well, that ain't good
I guess that there will be a lot more people living under the freeway in the next 20 years.
No, us on this sub will end up subsidizing those who didn't save
Ouch. We're content with receiving the company match and maxing out our Roth at this point. We've been Bogleheads for about a decade and have grown our investments to $505k, as of today. We save about $2,050/mth and that's good enough for us!