Are You In The Middle Class?

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.?

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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!

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23 thoughts on “Are You In The Middle Class?”

  1. Wow, great article, Joe. Yes, I do think income inequality is a problem, but the good thing is it’s not impossible to move up in class here, at least within the middle class brackets. In fact, it’s really easy compared to other places in the world, especially with people born here. Seems like sentiment is shifting within the working class to quit or organize, we will see if it makes a difference in the long run.

    I just ran my middle class calculator and I’m considered upper for the bay area. But the amazing part is my demographics, only 4% of people in my demo group are considered upper middle class, likely because I have no degree, and I’m Latino… Man, if that doesn’t put some things in perspective I don’t know what will. I’m super lucky.

  2. “Based on your household income and the number of people in your household, you are in the upper income tier, along with 32% of adults in Washington-Arlington-Alexandria.”

    …this is really weird news to me. I guess I’m used to comparing myself to our cohort full of actual rocket scientists, folks with terminal degrees, and type-A go-getters (we are none of the above, just two people with degrees unrelated to our fields who got entry-level jobs with our present companies in the mid-2000s). We make significantly less than our friends and family but I suppose significantly more than the average comparably-aged folks in our area.

    Because they’re using 2018 data I re-ran it with our 2018 incomes and we dropped to middle class. Whew!

  3. Oh no Joe,

    Wealth inequity? What happened to wealth inequality?

    Equality is treating everybody the same. Equity is treating everybody differently so that they all have the same outcome. Sounds like that old slogan “From each according to his ability, to each according to his needs”. That’s scary. But not as scary as the inflation that the Biden administration is causing.

    Just wait until they demand all FIRE’d people return to work so they can “pay their fair share”.

  4. Definitely middle-class by income, and in the top 2-3% when it comes to wealth in our age group. This feels like a pretty secure place to be, but I remind myself that one market crash can wipe out a lot of our wealth… so don’t go getting fancy!

    The gap to reach the 1% seems incredible to me. Basically they would need to have at least *double* our income and higher returns on investments over the same 20 year time period.

    That is pretty impressive when you think about it. Getting to be a 1%-er isn’t easy!

    • Well, I guess upper-middle class is still middle class. It really depends on where you live too, right?
      In other places, your family would be quite wealthy. In SF, you’re just middle class.

  5. My results look pretty similar to yours with income, demographics, and net worth. It’s always interesting that income generally is the determining factor for wealth status. It seems a little backwards to me when your actual wealth is what you’ve saved up (your net worth). Regardless, I’ll be thankful for that in a handful of years when we fill out Faith’s FAFSA! ?

  6. Extremely good post.

    We’re not in the middle class currently. We’re not in the top 1% but also I don’t think there’s any stretch that one could argue we’re even upper middle class when we’re both working. (When it’s just me, we drop down to upper middle class by income.)

    [email protected] Accidental Fire is incorrect. Widening economic inequality has not been caused by the middle class getting richer. Only a subset of the middle class has been getting richer. On the whole most people have not been benefiting from increased productivity. @Lazyman — such is the current state of economic inequality in the country today. You can make arguments for the top 10% or top 7% or top 5%, but there really is an astronomical gap between the top 1% and everybody else. I’m fine with getting more taxes (assuming everyone in my income bracket gets them), but if not taxing selfish lawyers and doctors more gets support for taxes from the private jet class then so be it.

    Yes, widening economic inequality is a big problem in the US. About 5 years ago this was a big topic on the econ circuit (before Trump came in and gave us even worse things to worry about). If you want to learn more, David Autor probably has some good videos on Youtube.

    • Wow, that’s great! Must be nice up there. 😉
      I’ve been watching many videos on YouTube. It started with various problems in China and I guess now we’ve moved on to the US.
      I see inequity locally too. Wealthy people eat in nice restaurants while can collectors dig through the trash cans. Teslas and Porsches are driven by homeless camps. It’s startling sometimes.

  7. I can’t see upper class being just the 1% – mathematically that seems wrong. It leaves the middle and lower classes to occupy 99% of people.

    We’re in the top 22% of income in our state, so we are doing well. When my wife retires we’ll go back to the middle of the pack at 53%, depending on how my side hustles do (or if I do them).

  8. Middle class by spend, upper by income is where we fall now, previously upper for both when spouse was working still. I like the networth calculator and it shows 2% for my age and 3% for my spouse’s range. We are both FIRE-ing soon so I expect that we will stagnate and then decline on the networth calculation as we drop significantly on income and I’m not certain the stock market will continue to bring exponential growth. Our FIRE version is likely to be lower paying jobs, rather than not work. The job hunt is “second career” focused that provides a steady retirement income benefit hopefully. I wish we could live off dividends but I wouldn’t feel comfortable with that no matter how I had setup the portfolio.

    • Your net worth is up there. I’m pretty sure you can maintain it even with less income.
      Our net worth gain is driven by investment gains these days, not income.
      I think it’s a great idea to work a bit after FIRE. Find something you enjoy working on so you’ll be occupied. It isn’t good to be completely retired, IMO.

  9. While the middle class has indeed been shrinking, it’s not because those folks are going to the poor class, they’re going to the upper middle class. Pretty much every suburb of every major city in America is full of upper middle class people now, and despite the climate impacts of their huge houses and SUVs, it baffles me a bit as to why this isn’t seen as a good thing. They moved up. I do agree that wealth inequality is an issue and has grown, but that’s largely because of the ultra billionaires/millionaires and the growth of the upper middle class.

    • I need to research a bit more. I think more of the middle class went down to the lower class than the other way.
      Also, I don’t think huge houses and SUVs mean upper class. You have to look at income and net worth too. I guess you could spend like the upper class even if you aren’t. That’s dangerous.

      • Nope, not true. Pew did research on this. And over the decades some people did move down to the lower class, but more moved up to the upper class.

        I know this isn’t the only factor, but the elephant in the room that almost no one talks about these days is the 40% out of wedlock birth rate in America. Given that statistic, I’m surprised the middle class hasn’t shrunk even more. Having kids outside of marriage usually doesn’t work out well for the people doing it or for future generations.

  10. Joe, you ask, “Are you in the middle class? ”

    I can’t use the calculator since I live in Canada.

    Having said that, I was a “struggling poverty case” for ten years, between 1981 and 1991, from the time I was 32 years old to 42 years old. I made a total of around $85,000 during those ten years, an annual average income of around $8,500. That was below the poverty line for a single person in Canada. So I was close to the bottom. But let’s be clear. Even though my net worth was MINUS $30,000 (due to student loans) at the end of that decade, I never thought of myself as poverty stricken during those 10 years.

    Interestingly, now at 72, my retirement portfolio is likely larger than that of over 90% of people my age in Canada. But I do not know if I am considered lower middle class or upper middle class. My income has lately fallen to around $100,000 CAN a year but I don’t have to touch my retirement portfolio managed by my financial friend with RBC Wealth Management. I spent all the business income that I took in from my creative works this year, not saving a dime, and feeling great about it. But my retirement portfolio went up by over $200,000 in the last year so I suppose I can say my net worth went up by that much (although some of this increase is taxable).

    Quite frankly, I don’t know whether I am lower middle class or upper middle class. I do know, however, that I have flown Business Class on my last 15 of 16 flights (one didn’t offer Business Class) and I am scheduled to fly Business Class on 12 of my next 14 flights (2 don’t offer Business Class). That alone makes me feel that I am upper middle class.

    The good news for me is that I have no debt and I am pretty well financially dependent
    even though I have worked less than half of my adult life, and when I have worked, I have only worked 4 or 5 hours a day. I would imagine that a lot of people in the upper middle class would not consider themselves financially independent. “When you’re financially independent,” stated “National Post” financial writer Jonathan Chevreau, “you work because you want to, not because you have to.”

    • You’re right about business class flight. I only flew business class once and it was quite nice. It was a free upgrade.
      I just booked a flight to Thailand and looked at business class. The price is 3 times the price of economy seats. That’s too much for me. Maybe when I’m rich, I’ll splurge for those seats.
      Great job having no debt. The only debt we have is the mortgage on our home.
      Thanks for sharing!

    • Yes, I’m sure we’ll be anxious for at least a year. If everything goes well, we’ll relax a bit. It takes time to get used to any new situation. We should have enough income from side hustles and passive income to cover our cost of living, though. I don’t think we’ll be too stressed out.


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