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What's middle class

October 29th, 2015 at 10:01 am

I don't know what is middle class it appears to be what you live like. Most people aren't sure either. Great discussion on the forum.

I think the house we're in is absolutely middle class, it has 3 bd, 2.5 ba and is 1800 sq ft with a 2 car attached garage on 5000 sq ft lot. It's in a preplanned neighborhood. Lots of young families are moving in school district. People have either 1 or 2 cars. They both work or a stay at home parents. It appears completely middle of the road.

Is it more than we had 40 years ago? In some ways yes. We have internet, cable tv, cell phones, etc. But in other ways I think the middle class also has less.

What ways? It is a fact that less people today are covered by pensions than 40 years ago, even 20 years ago. Very few people have free medical insurance for life from their jobs after retirement. I think only the military has it. Constantly articles are written about people having only $100k in 401k. Here's the truth that when people like my mom in her 60s retired at 55 with a pension for life she didn't need a 401k. She had one but she didn't have much nor did most people older than her. The majority of baby boomers had pensions and social security. I am curious what will happen to people when the scales start to tip and people retire without pension?

Second health insurance premiums have gone up exponentially. People are still tied to employers but many employers are trying to switch employees to high deductible premium plans and use health savings accounts. This usually costs more for the employees. The real hit? That 40 years ago most employers picked up the entire premium payment, versus today when employees are often foot at least a portion of the premium if not most.

Third, college costs have skyrocketed. Even cheaper alternatives like community college and state schools are difficult to afford working and going to school. In the 80s people could still "work" and make enough to afford tuition. Is it realistic now? No. Now even the cheapest schools are out of reach for people working and going to school full time. The irony is that having a degree no is more important than ever!

I think in many ways the middle class lives more luxurious lives than before. We have a more amenities that people didn't have because of technology. But I also think that the middle class was more cared for in retirement and prior by companies, government jobs, versus today a lot more emphasis is placed on the worker.

What do you think defines the middle class?

6 Responses to “What's middle class”

  1. Nika Says:

    "I think the house we're in is absolutely middle class, it has 3 bd, 2.5 ba and is 1800 sq ft with a 2 car attached garage on 5000 sq ft lot."

    Living large, you are awash in space and unimaginable luxury. Smile 2.5 bath! I'd kill for 1.5!
    The house we are in is an apartment -- 1.5 br, 1 bath, 950Sf, no lot, one outdoor parking space qualifies as... not very middle class.

  2. snafu Says:

    LAL, the employee pension of last century was funded near 50:50 with about 17% automatically deducted from pay to a cheap but efficient mostly government bond fund paying between 7% - 10% on average. Danger lurked because there was no employee oversight and employers used the 'deduction' at will to fund themselves. ie The big 4 auto manufacturers kept themselves afloat and retirees eventually lost their benefits.

    Have you noticed everything is being downloaded to the consumer. Perhaps you've read, The Organized Brain.
    ATMs are replacing tellers, on-line banking replaces chequing accounts, automatic check-outs are replacing grocery clerk, e-filing income tax makes talking to a real person astonishing and anywhere I call for information has me sputtering as they list 'press 1 for yadda, 2 for nadda and lately double and triple numbers for a recording that is to vague to answer the details you need.

  3. creditcardfree Says:

    Who says you have to retire? Years ago social security was set up for those who were too old to work. The benefit age was 65...when life expectancy wasn't even that near that for many people. And there are people already retiring without pensions. My mother in law was a nurse and has been retired for nearly 18 years. She lives on her savings and social security and is 80 years old.

    Middle class is a tough one to define because their are so many factors and I'm pretty sure it isn't defined by how many bathrooms you have. Employers didn't always offer insurance either. That is also a relatively new thing in our society. And yes, military members get the wonderful VA health insurance for free. Have you heard about their ability to service their members? It's awful!!

    I think the luxuries are a bit of the problem. People think they need cable tv and iPhones. No, people need to save first for retirement and if they can afford those things after than by all means buy them.

  4. livingalmostlarge Says:

    Nika you make more than most people in the US, but you live in a place where that is not rich. I've said before you should move if you don't like how you live. You don't make enough for NYC. I can say that because I know people who just bought in NYC. I know what they paid and it's ridiculous.

    Snafu, in Canada it's around 17%. I know because my MIL told me. It is not 17% in the states. Certainly not at the state and federal government. In Hawaii it was 7.5% contribution then 0%, now 6%. Not enough to fund it. I believe military is 0%. Ask CCF she'd know better. It's 0% contribution and after 20 years it's 50% of base salary for military. Calpers is 11% for teachers. I believe it's the 8% in MA for teachers for 60% of high three pension. FERS contributes 7% to their defined benefit.

    There is no way you can have that return and generate that sort of annuity at that payout with that little contribution. Thus why there are so many underfunded pensions. No one addresses the fact part is the overestimation of returns and the under contributions.

    Yeah I noticed a lot of things are becoming automated. UGH. Sometimes it's annoying.

  5. Joe Says:

    I don't have a pension and I'm not sure I would trade my 401K for one. I've been contributing to a 401K since I started working my first full time job in 1986. I've switched employers several times and my income has increased gradually from 27K in 1986 to about 100K now. I have only been maxing out my contributions recently but my 401K balance has just passed one million dollars. My Dad gets a pension but it does not include a COLA - so he gets the same monthly check he got when he retired in 1992.

  6. Livingalmostlarge Says:

    Joe what did your dad contribute for his pension? Anything? According to snafu was it 17%? It it's not something along those lines then he's getting the better end of the deal living off the company. He didn't contribute enough to pay for his own annuity.

    As for your 401k you are generating an annuity of either $30k or $40k depending on what rate you calculate for $1M. If you had a pension and it paid out what do you think you'd have contributed and what would you have saved?

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