The lines that divide Americans by economic class have always been blurry. For many households, where they stand on the income ladder comes down to a feeling rather than numbers.
But how can you know if your feelings line up with reality?
Pew Research Center’s income calculator is the quickest way to find the answer to that question.
But after you find out how you stack up, you may find the more important question is what do you do with that information so you can safely keep ascending that ladder.
Don't miss
Your home insurance company is ripping you off — here’s how to spend less on peace of mind
You don’t have to be ultra-rich to own fine art — here’s how you can get a piece of a real Picasso
Upper
Based on Pew’s analysis, a household of three needs an income of $156,600 to meet the definition of upper class, which amounts to more than double the national median.
In analyzing the trends, Pew points out that the wealthiest households are the only ones to have seen gains in wealth after the start of the Great Recession. Between 2007 and 2016, the median net worth of the top 20% increased 13% to $1.2 million.
Meanwhile, the lowest earners saw their wealth decrease by at least 20% over that period of time.
The result is that the wealth gap between America’s richest and poorest families has grown into a chasm — more than doubling between 1989 and 2016.
Middle
Many Americans associate themselves with the middle class. In fact, a Gallup survey from 2022 shows that just over half of respondents identified as either middle or upper middle class.
Based on Pew’s calculator, middle class earners are actually those whos income falls between $52,200 and $156,600, or two-thirds to double the national median when adjusted for local cost of living and household size. In 2021, the median income was $70,784, according to Census Bureau data.
However, while household incomes have been trending upward since 1970, Pew’s research reveals that most of the increases were seen before 2000. In just three decades, the median income rose by 41% to $70,800.
If after 2000 household income had continued to grow at the same rate, the current median would be about $87,000 — significantly more than it is now.
Lower
Based on Pew’s analysis, a three-person household would be considered low-income if they’re bringing in less than $52,200 a year. This group makes up a significant chunk of the U.S. population, with about 38% of households making less than $50,000 in 2021.
However, keep in mind that geography matters here: In Kansas City, Mo., for instance, that national figure represents a middle-class income but would be considered fairly low in New York City.
But what’s important to highlight when discussing lower-income households is the opportunities for advancement. While middle-class households rely on home equity to build their net worth and upper-class families rely on financial assets and investments to build their wealth, Pew found lower-income earners have fewer options to get ahead.
In fact, research indicates that the wider the wealth gap, the harder it is for lower-income Americans to move up the class ladder.
It’s not just about the numbers
It’s important to remember that economic status as a holistic snapshot that considers far more than simple income.
Researchers have determined that education, location, social connections and other factors can inform a person’s class identification.
On top of that, less-tangible measures of holistic wealth — mental and physical well-being, access to cultural assets, a healthy social network — can all factor in as heavily as income and lead someone with a technically lower-class income to feel as fulfilled as any upper-income earner.
Consider, too, that some high-income earners could technically qualify as an upper-class household even as debt and other financial obligations leave them, practically, in a much different place.
So do the numbers matter? Maybe. But they can always change.
What might matter more is snatching up the opportunities available to your family to continue to keep your household moving up those rungs.
Protect your position
When it comes to building wealth (and a secure financial future), you never want to lose any ground you've gained. But with a 6.5% inflation rate and potential recession peeking around the corner, that threat may be keeping you up at night.
One solution to help you sleep better: Find a financial adviser who can help navigate your finances and make sure your assets are safeguarded.
Researching and calling multiple financial planners can be a time-consuming hassle, but there are ways you can easily browse vetted advisers that fit your needs. Booking a consultation is free and only takes a few minutes.
If you're unsure how to safeguard your hard-earned savings, it’s better to find answers sooner than later, while time is still on your side.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
