In America, it’s good to be rich. But if millionaire status isn’t quite in the cards just yet, middle-class security isn’t too shabby of a goal.
But how much do you have to make to be a member of the middle class and how can people lock in their spot if their salary comes up a little short?
GOBankingRates asked the experts.
A Middle-Class Income Is $50,000 to $150,000
Broadly speaking, you can count yourself as a member of America’s middle class if your earnings fall within a specific $100,000 salary range.
“For a family of three to five, a middle-class designation typically means an annual income ranging from $50,000 to $150,000,” said Jake Claver, a finance expert with a Qualified Family Office Professional (QFOP) certification and the founder of the wealth management firm Digital Family Office.
If that seems like an overly broad span, there’s a reason the spectrum is so vast.
“The definition of middle income ranges from earning two-thirds to double the median household income,” said CFP and The Ways To Wealth founder R.J. Weiss, who cited the Pew Research Center’s widely accepted definition of the term.
According to the U.S. Census Bureau, the national median household income in the United States is just shy of $75,000. Two-thirds of that amount is $50,000, and double that is $150,000, which validates Claver’s numbers to the penny — but it all depends on where you live.
“The exact figures fluctuate across different geographic regions,” Weiss said. “For instance, in California, where the median income is $84,097, the middle-class income bracket ranges from $56,065 to $168,194.”
But California is a big place — as is every state in terms of regional income fluctuations. To get it right, use the Fannie Mae Area Median Income (AMI) Lookup Tool to find the precise median income where you live. If you earn two-thirds to double that amount, congratulations: Your family is in the middle class.
If not, don’t worry. There are steps you can take to achieve middle-income security.
People who earn less than $50,000 can budget, save and invest toward a higher status, and those who make more than $150,000 can spend and mismanage their way into poverty, but your financial habits can’t technically buy you into or out of the middle class.
“Although savings can contribute to overall wealth accumulation, especially when spending is kept below earnings over extended periods, it doesn’t directly factor into the definition of the middle class,” Weiss said. “The fundamental strategy for families aiming to elevate to the middle class primarily revolves around increasing their income. Of course, this is much easier said than done — but there are a few smart options.”
Consider Strategic Job Switching
Research shows that if your current job doesn’t pay you a middle-class wage, a new employer might.
“Data suggests that individuals often secure higher wages when they switch jobs,” Weiss said. “A proactive approach in periodically seeking higher-paying job opportunities can significantly boost a family’s income. The Wage Growth Tracker by the Federal Reserve Bank of Atlanta provides insightful data on this idea.”
You have a much better chance of earning a higher wage with a different employer if you bring new skills to your new job.
“Coupling job switching with acquiring valuable skills pertinent to one’s career field amplifies the potential for income growth,” Weiss said. “Investing time and resources in gaining certifications, attending workshops or pursuing further education can render individuals more marketable and eligible for higher-paying roles.”
If you can’t boost your income to at least two-thirds of the AMI where you live, consider moving to a place with a lower AMI, if your occupation supports mobility.
“For those with the flexibility to work remotely, relocating to regions with lower median incomes while maintaining or even increasing their current earnings can be a strategic move,” Weiss said. “This not only potentially places a family within the middle-class bracket in the new locale but also could lower living expenses.”
If a spouse, partner, roommate, adult child or anyone else in your household left the workforce to raise a child, go back to school or for any other reason, their re-entry into the labor market could be your ticket to the middle class.
“Two incomes are often needed,” said Fluent in Finance founder Andrew Lokenauth, a financial planner and Wall Street veteran who held leadership positions at JP Morgan, Goldman Sachs and Citi. “It’s tough on one income given the costs of housing, healthcare, education, etc. Dual incomes provide more flexibility.”
If no second income earner is available, the answer might be a second income stream.
“Supplement your pay with side income,” Lokenauth said. “Freelance gigs, renting out unused space or driving for Uber can provide extra income.”
More From GOBankingRates