The term “middle class” is often used in conversations about economics, politics, and social status, but its definition varies widely depending on the context. Generally, the middle class describes a social class that falls between the working class and the upper class.
Most people think of the middle class as an economic reality, but there are many people who identify themselves as middle class even if they are below or above the middle class income level.
Let’s explore nine ways to define what it means to be middle class.
1. Income
From an economic perspective, the middle class is often defined by income. Pew ResearchHouseholds that earn between two-thirds and two times the median household income for a particular area are considered middle class. This range is adjusted based on the cost of living in the area, so a metropolitan middle class is different from a rural middle class.
According to this formula, the typical middle-class family will earn just over $106,000 in 2022, while a high-income family will earn about $257,000 and a low-income family will earn just $35,000.
Fewer Americans are considered middle class, as measured by income.
According to Pew, by 2023, roughly half of Americans (51%) will be middle-income, 30% will be low-income, and 19% will be upper-income.
In 1971, 61% of Americans lived in middle-class homes.
2. Overall Financial Health
The economic reality of being middle class (or any class) is about more than just income. In terms of good personal finance habits, someone who can balance their monthly personal budget while also saving for the future may be considered middle class. Financial wellness is determined by a variety of factors related to your current living situation and retirement preparation (debt, savings, risk management, homeownership, etc.).
NEW: Have you taken the Financial Wellness Assessment with the Boldin Retirement Planner?
3. Stability
The middle class might be defined as people who are fortunate enough to have a certain degree of stability in life: having dinner with their family every night, having medical care, having a running car, a steady job, etc. Stability and consistency make life less stressful.
4. Cultural and social identity
Economic realities aside, you may be considered middle class if you embody certain values such as hard work, responsibility, and self-reliance. People with a middle-class mindset also tend to engage in cultural activities and hobbies that reflect work-life balance. Education and family are valued.
The reality of my parents’ divorce probably meant that we were working poor when I was growing up, but I thought of myself as middle class, and it didn’t matter that I didn’t actually have a middle-class income; I felt a sense of belonging among the more affluent.
Conversely, I live in a town filled with million-dollar homes and peers who make hundreds of thousands of dollars each year, and while the community is objectively upper class, I consider myself middle class.
5. education
Education plays a key role in defining the middle class. Many middle-class people have completed some level of higher education, which typically correlates with having a higher-paying job, but the cost of college can also burden households with student loan debt, worsening their economic prospects.
According to a Pew Research Center report, in 2022, 52% of Americans age 25 and older with a bachelor’s degree or higher lived in middle-class households, and an additional 35% lived in high-income households.
Is college still worth paying tuition fees?
6. Occupation
So what are middle-class jobs? The answer is more complicated than you might first imagine.
Middle-class occupations may be defined by income. According to the Pew Research Center, the six industries with the highest percentage of middle-class workers are:
- Military (65%)
- Government (61%)
- Education (61%)
- Manufacturing (59%)
- Transportation, warehousing, public works (59%)
- Construction (59%)
But there are plenty of other ways to be perceived as having a middle-class job.
- Occupation type
- income
- Job Security and Benefits
- Advancement opportunities
- The education required to work in this field
- Control over time or a say in what happens every day
7. Homeownership
Homeownership is often seen as a cornerstone of the middle-class dream, symbolizing financial security, independence and long-term investment.
For many people, owning a home not only means a place to live, but it is also an important milestone in achieving financial stability. It brings a sense of pride and accomplishment and allows individuals to build assets over time and pass on wealth to future generations. Additionally, homeownership brings stability and a sense of community, as homeowners are more likely to stay in one place and contribute to their neighborhoods.
Despite challenges such as rising housing costs and economic fluctuations, home ownership remains a key aspiration for many middle-class families and represents the promise of a better and more secure future.
8. Savings
Savings play a key role in defining middle-class life, providing financial comfort and a path to future opportunity. For middle-class families, having a substantial savings account means peace of mind against unexpected expenses like medical emergencies or car repairs, and the ability to invest in important life goals like education, homeownership and retirement.
Learn more about average household savings.
9. Living the American Dream
While the American Dream may evolve, it generally embraces the freedom to pursue happiness, whether through starting a business, raising children, or simply enjoying a comfortable lifestyle. Interpretations vary widely, but what the middle class shares is the aspiration for a secure, fulfilling life where hard work and determination bring tangible rewards. This dream adapts to individual values and circumstances, reflecting the unique aspirations of each individual, while collectively driving the ethos of middle-class America.
The only way to get out of the middle class (or any class): financial planning.
Whatever your “class,” if you want to do better financially, it pays to create and manage a comprehensive financial plan. With the Boldin Retirement Planner,
1) Get organized and set goals
2) Evaluate your financial strengths and weaknesses
3) Learn how to get better results through thoughtful decisions and personalized tips from your digital coach
4) Monitoring your plan and updating it over time helps you stay on track.
