6 Signs You’ve Fallen Out of the Middle Class

A woman holds a credit card and her phone.
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The notion of what it means to be middle class can be ambiguous. On one hand, it’s an omnipresent American cliché of living comfortably, being able to save money while also having funds for leisure, owning a car and perhaps a house, as well as a recurring political theme. On the other hand, it also remains vague what it really means — and how much money would qualify to fall in this bracket.

Countless experts constantly opine on the matter and on what’s happening with the “American middle class,” and whether it’s thriving/shrinking/regressing.

To make matters more complicated, with inflation having battered the finances of many Americans, some individuals who were middle class a few years ago might not be considered being part of that group anymore. And don’t forget about cost of living differences across the country.

What Is Middle Class?

“Just identifying whether or not you are a member of the middle class isn’t a straightforward task,” said economist Peter C. Earle of American Institute for Economic Research. “There are a number of competing definitions: some based upon falling within a certain household income range, others on education and credentials, and others on one’s station in life and self-definition.”

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According to the Pew Research Center, the middle class has steadily contracted in the past five decades, with the share of adults who live in middle-class households falling to 50% in 2021, from 61% in 1971.

And for the Pew Center, there is a clear definition of what middle-income households are: those with an income that is two-thirds to double the U.S. median household income. And in 2021, that median income was $70,784, according to the Census Bureau.

In turn, Americans who are middle class are in households making between $47,000 and $142,000 in 2021 — and updated for inflation, that lower number would be $53,000 today, said Jason Sorens, PhD, senior research faculty at American Institute for Economic Research.

“If you live in a more expensive metro area like San Francisco, San Diego, Honolulu or New York, you’d need to make around $61,000 to have the same standard of living that the average American would have at $53,000,” he said.


There is also the matter of perception. About half of U.S. adults consider themselves members of the middle class, including 38% who identify as “middle class” and 14% as “upper-middle class,” according to a Gallup survey. In addition, most of the rest describe themselves as either “working class” — with 35% — or “lower class” — 11% — with just 2% identifying as “upper class.”

Yet, while there is a broad range of factors to define whether or not you’re middle class, some experts said that there are signs that can tell you when you’ve fallen out of it.

Using Emergency Money

According to Sebastian Jania, owner of Ontario Property Buyers,there are a number of signs that one has fallen out of the middle class.

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The first one is that you’re consistently using money that you swore was for emergencies, such as credit cards, lines of credit and your emergency fund, he said.

Living Paycheck-to-Paycheck and Not Being Able To Save

If you’re unable to stash away some cash for unexpected expenses and are living paycheck-to-paycheck, it’s a glaring sign that you’ve fallen out of the middle class, according to Jeff Rose, CFP and founder of Good Financial Cents.

“The middle class, generally, has the financial stability to maintain an emergency fund, typically recommended to cover three to six months of living expenses, at a minimum,” he said.

Rose added that this absence of emergency savings isn’t just about numbers; it’s about the constant stress and anxiety of living on the financial edge.

“It’s about the vulnerability of being one car breakdown or medical emergency away from a financial crisis,” he said.

And a Pew survey also underlined that sentiment, finding that most American adults — 86% of respondents — agree that the ability to save money for the future is essential to being middle class.

Not Being Able To Cover Your Needs

According to Jay Zigmont, PhD, CFP, founder of Childfree Wealth, while there may have been lines between the middle class and others in the past, in the U.S. now, it is a bit more fluid.

“You could be solidly in the middle class in a low-cost state such as Mississippi and be barely making ends meet with a move to a high-cost-of-living state like California,” he said.

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Yet, Zigmont added that you know you are in trouble when you can barely make ends meet.

“While more than half of the U.S. lives paycheck to paycheck, the test may be more about covering your needs than your wants,” added Zigmont. “If you can no longer cover your basic needs, you are no longer in the middle class. If you are living off of debt or credit cards to make ends meet, you are in trouble.”

No Access to Credit

Not being able to borrow money and take on loans could be another sign you’ve dropped out of the middle class.

“The new middle-class divide is access to credit,” Jonathan Walker, executive director of Elevate Center for the New Middle Class, a research and advocacy group, told AZCentral. “When unexpected expenses pop up, they can become a crisis if you don’t have access to credit.”

Owning a Home

As Pew explained, the public is split when it comes to using owning a home as a factor of being middle class, with 41% saying it’s a requirement, while 57% disagree.

But if you can’t afford to maintain the home you own, you might have slipped out of the middle class and are potentially now in poverty, said Brian Chevalier-Jordan, chief marketing officer of NationalBusinessCapital.com.

If You Find Yourself Suddenly Living Beyond Your Means

Similarly, Chevalier-Jordan said that could happen if the length of a car loan has crept up from five years to six years. In that case, “you are either buying a car that’s too expensive, or your income isn’t going as far as it once did,” he said.

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“If you’re thinking about declaring bankruptcy or have already done it, you’re living beyond your means,” he added. “You might have already said goodbye to the middle class without realizing it.”

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