The term “middle class” is often used in conversations about economics, politics, and social status, but its definition can vary widely depending on the context. In general, the middle class represents a segment of society that falls between the working class and the upper class.
While most people think of the middle class as an economic reality, there are many people who fall below or above middle class income levels and who consider themselves middle class.
Let’s explore 9 ways to define what it means to be middle class.
1. Income
Economically, the middle class is often defined by income. According to Pew Research CenterA household with an income between two-thirds and twice the median household income in a given area is considered middle class. This range is adjusted based on the local cost of living, making the middle class in a major city different from that in rural areas.
This formula resulted in the typical middle-class family receiving just over $106,000 in 2022, compared to about $257,000 for a high-income family and $35,000 for a low-income family.
Fewer Americans are middle class when measured by income.
According to the Pew Center, in 2023 nearly half (51%) of Americans were middle-income, while 30% were low-income and 19% were high-income.
In 1971, 61% of Americans lived in middle-class households.
2. Overall financial health
The financial reality of the middle class (or any class) really goes beyond income. From a personal finance habits perspective, one is considered middle class if they are able to balance their personal budgets each month while also saving for their future. Financial wellness is determined by a whole host of factors related to how well you are doing today and how prepared you are for retirement (debt, savings levels, risk management, home ownership, and more).
New: Have you reviewed your financial health assessment in the new retirement plan?
3. Stability
The middle class can be defined as those who have some degree of stability in their lives. Whether it’s eating dinner with the family every night, having access to healthcare, a working car, or a stable job, stability and consistency can reduce stress in your life.
4. Cultural and social identity
Regardless of the facts of your financial situation, you may consider yourself middle class if you embody certain values such as hard work, responsibility, and self-sufficiency. People with a middle-class mindset also tend to engage in cultural activities and hobbies that reflect a balanced work-life dynamic. Education and family are valued.
When I was a child, my parents’ divorce probably meant we were working poor. However, I thought of myself as middle class. It didn’t matter that we didn’t have a middle-class income, I felt like I belonged among my better-off peers.
In contrast, I now live in a town full of multi-million dollar homes, and my peers earn hundreds of thousands a year. The community here is objectively upper class, but it is middle class.
5. education
Education plays a crucial role in defining the middle class. Many middle-class people have completed some level of higher education, which is often associated with better-paying jobs, but the cost of college can also cripple families with student loan debt, devastating a family’s economic prospects.
Pew reports that among Americans ages 25 and older in 2022, 52% of those with a bachelor’s degree or higher lived in middle-class households, and another 35% lived in upper-income households.
Is college still worth the tuition?
6. Professions
So what makes a middle class career? The answer is more complicated than you might first imagine.
Middle-class occupations can be defined by income. According to the Pew Center, the six industries with the largest share of middle-income workers include:
- Military (65%)
- Public Administration (61%)
- Education (61%)
- Manufacturing (59%)
- Transportation, storage and utilities (59%)
- Construction (59%)
However, there are many other ways someone might define themselves as having a middle-class job:
- Occupation Type
- Enter
- Job Security and Benefits
- Opportunities for advancement
- Education required to work in this field
- Time control or how much control you have over what you do each day
7. Home ownership
Home ownership is often seen as the cornerstone of the middle-class dream, symbolizing financial stability, independence, and long-term investment.
For many people, owning a home is not only a place to live, but also an important milestone in achieving economic security. It provides a sense of pride and accomplishment, allowing individuals to build equity over time and potentially pass wealth on to future generations. Furthermore, homeownership provides stability and a sense of community, as homeowners are more likely to stay in one place and contribute to the local area.
Despite the challenges of rising housing costs and economic volatility, home ownership remains a major aspiration for many middle-class families, embodying the promise of a better, more secure future.
8. Saving
Savings play a critical role in defining the middle-class experience, providing a financial cushion and a path to future opportunities. For middle-class families, having a solid savings account means security against unexpected expenses, such as medical emergencies or car repairs, and the ability to invest in important life goals like education, home ownership, and retirement.
Learn more about average household savings.
9. Living the American Dream
While the American Dream may evolve, it typically includes the freedom to pursue happiness, whether through entrepreneurship, raising a family, or simply enjoying a comfortable lifestyle. Despite its varied interpretations, the common denominator among middle-class people is the aspiration for a secure and fulfilling life, where hard work and determination lead to tangible rewards. Adapted to personal values and circumstances, this dream reflects the unique aspirations of each individual while collectively driving the spirit of the American middle class.
The Only Way to Ensure You Surpass Middle Class (or Any Class): Financial Planning
No matter what your “class,” if you want to do better financially, you’ll succeed by creating and managing a comprehensive financial plan. The new retirement planner lets you
1) Organize your affairs and set your goals.
2) Evaluate your financial strengths and weaknesses.
3) Learn how to do better work by making informed decisions and personalized advice from a digital coach.
4) Stay on track by enabling you to monitor your plan and make updates over time.
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