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Many people are content with living a middle-class lifestyle. But what does middle class even mean, anyway? Pew Research Center defines middle class as having an income that’s between two-thirds and double the national median income.
During the second quarter of 2024, median weekly U.S. earnings for full-time workers were $1,143, according to the Bureau of Labor Statistics. That puts the median annual wage at $59,436 if we assume a 52-week work year.
According to this formula, if you earn less than $39,505, you’re considered lower-income. And if you earn more than $118,456, you’re upper class. With that in mind, here are some signs that you’re no longer a member of the middle class but have started to climb the ladder.
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1. You’re able to save for retirement each year
Vanguard reports that as of 2023, the average 401(k) participant contributed a “historic high” of 7.4% of their salary to their account. If you’re able to save a larger percentage of your income for retirement, then it may be that you’re earning enough to move beyond the middle class.
On an average middle-class income, many workers struggle to fund a retirement plan to begin with, let alone save a higher percentage of their salary than the typical worker.
If you have a strong retirement fund in place, you might consider diversifying your investments in the future with a gold IRA.
As an industry leader in precious metals and authorized dealer for the U.S. Mint, Thor Metals gives you the opportunity to diversify your retirement portfolio and stabilize your finances in the face of persistent inflation. Gold is historically a strong performer in the market, and this individual retirement account allows you to invest in gold while benefiting from the tax advantages of an IRA.
Request your free information kit from Thor Metals to find out if this retirement account is right for you.
If you’re newly upper class — and therefore perhaps new to investing — you’ll want to ensure that your retirement fund is on the right track. To help you spend less time researching and worrying about it, [Vanguard] can connect you with vetted financial advisors suited to your unique needs.
With a minimum portfolio size of $50,000, this service is best for clients who already have a nest egg built up but are ready to grow their wealth with a variety of different investments. All you have to do is [set up a consultation] with a Vanguard advisor, and they will help you set a tailored plan and stick to it.
2. You invest for passive income
If you earn a large amount of passive income on top of the wages your employer pays you, it may be that you’re no longer middle class.
Many high earners have reliable income sources other than their paychecks, from rental properties to investment portfolios, and many of these pay regular dividends.
Real estate
Smart investors look to real estate not only to diversify their holdings but also to provide them with regular income.
With platforms like Fundrise, you get access to an expansive portfolio of alternative investment opportunities spanning real estate, private debt, and venture capital. With over two million investors and over $7 billion under management in real estate assets alone, Fundrise is an accessible way to diversify your portfolio with the potential of yielding dividends every quarter.
To get started, all you have to do is share some details about your personal and financial background, along with your investment preferences, and Fundrise will recommend a portfolio aligned with your goals.
If you’re an accredited investor, you can even invest in shares of commercial real estate with platforms like First National Realty Partners (FNRP). Take advantage of the sector with professionally vetted deals on properties leased to national grocery chains and health care facilities.
FNRP gives you access to necessity-based real estate that’s essential to the local community and therefore likely to remain desirable.
Alternative investment options
If you’re finding yourself in the position to invest a larger-than-average proportion of your income, it’s time to consider diversifying your portfolio outside of the traditional avenues for wealth-building, like the stock market and real estate.
One way that the wealthy spread out their risk is through investments in fine art. Even if you’re not yet part of the elite club of the top 1% of earners, you can still tap into this lucrative market, which outpaced the S&P 500 by 131% between 1995 and 2021.
If you want to gain some exposure to the art world in your portfolio, Masterworks is a top platform for retail and accredited investors to invest in fractional shares of artworks by iconic artists from Banksy to Basquiat. When Masterworks sells a piece you’ve invested in, you get a return from any net proceeds.
To begin investing in art, simply browse through the pieces in their portfolio and choose how many shares you’d like to buy. Masterworks will take care of the rest — making elite art investments accessible and hassle-free.
Read more: Cost-of-living in America is still out of control — use these 3 ‘real assets’ to protect your wealth today, no matter what the US Fed does or says
3. You’re actively taking steps to reduce your tax burden
Many people don’t think about taxes until the time comes to file their yearly return. But if you’re actively taking steps — either on your own or with the help of an accountant — to lower your tax burden, then it may be that your income is high enough to go beyond the middle class.
These tax-reducing strategies may include maxing out retirement plans, taking losses on investments to offset capital gains (and some ordinary income), and increasing charitable contributions.
If tax season makes you break out in a cold sweat, you can find a professional to help you cut your tax bill down to size with Zoe Financial. The advisors can guide you on how to trim your taxes, grow your nest egg, and even help determine your living expenses during retirement.
Zoe connects you with professionally vetted fiduciaries, financial advisors, and financial planners. All you have to do is answer a few questions and their algorithm will match you with the best options for you to choose from.
4. Your only debt is a mortgage
Middle-income households often have to take on debt to cover their basic needs — especially given the impact of inflation in recent years. Case in point: Between the end of 2022 and the end of 2023, total U.S. credit card balances rose from $931 billion to $1.05 trillion, according to TransUnion.
But if the only debt you’re carrying is a mortgage and you can cover your expenses without having to charge a portion of your bills on a credit card, then it may be that you have surpassed the middle class.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.