Summary

Most Americans will make it to some rung of the middle class. Heres how much you need to get to the next tier these days.

Essentially, every client we work with views themselves as middle class – even multimillionaires, one financial planner said. Heres the reality.

Years of rising costs for necessities like housing, transportation and healthcare are causing many Americans to feel like financial comfort – once a feature of middle-class life – is getting further out of reach.

While many people think about class in terms of income, many financial experts measure it by net worth instead, as a persons assets and debts often have a greater impact on their long-term financial security and financial freedom than income alone.

Bo Hanson, a financial planner and co-host of the Money Guy Show, outlined one framework in a recent video about which wealth class a person might fall into based on their net worth.

Using data on net worth – i.e., assets minus debts – from the Federal Reserve, Hanson broke out five classes. The top and bottom groups were not labeled:

Median net worth varies widely – starting at $39,000 for those younger than 35, and peaking around the typical retirement age at $410,000 for those ages 65 to 74, according to the Federal Reserve.

In other words, over their lifespan, the average American eventually reaches some rung of the middle class.

Such benchmarks can be helpful if they spur people to realize theyre a little behind their target savings goals and make changes to get on track, Dan Honsberger, a financial planner at Reel Financial Planning, told MarketWatch.

At the same time, he said, a person with a higher net worth should not become complacent simply because their wealth class is above average. Instead, they should evaluate how much money th

Source:

Read More