5 Ways the Middle Class Will Get Richer in 2025
Written by
Andrew Lisa
Edited by
Molly Sullivan
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Though it may not seem like a lofty goal to aim for the middle, today’s American middle class has some lucrative income potential. The Pew Research Center estimates that the middle-class income range is approximately $46,067 to $138,200, with a median household income of $69,100. This is quite a net-worth range, and depending on where you live, the term “middle class” may not cover as much ground as you think.
So, why are the ranks of retirement fund millionaires in the U.S. expanding so rapidly? GOBankingRates spoke with a seasoned financial professional who shed light on how next year could see so many average earners transform into seven-figure players.
An Improving Stock Market
The first reason for America’s growing nest eggs is rooted in something no household, rich or poor, can control. With Donald Trump heading back to The White House in January, things could go either way for the stock market in 2025 — but there has already been a post-election boost.
“One major factor driving middle-class wealth growth is the stock market’s sustained performance,” said Ben Klesinger, who has spent 20 years in the finance industry as CEO of Reliant Insurance Group and Helping Hand Financial. “Many 401(k) plans are heavily invested in equities, and the recent bull market has provided substantial growth in these accounts.”
Rising Auto-Enrollment Rates Are Getting More People Invested
A red-hot stock market means nothing if you’re not invested — and a 2024 Fidelity report found that record-high contributions mean more people are putting more of their money to work.
“Another crucial factor is increased retirement contributions,” Klesinger said. “Automatic enrollment and employer matching programs in 401(k) plans have encouraged more consistent and substantial employee contributions.”
According to Vanguard, the percentage of its retirement plans with automatic enrollment increased every year over the last decade, which is one of the most consequential factors in retirement saving. Retirement plans with auto-enrollment have better participation rates among new hires compared to those with opt-in enrollment.
“These enhancements ensure that individuals leverage compounding interest effectively,” Klesinger said.
Good news — that trend is almost certain to continue and expand starting next year. The bipartisan SECURE Act 2.0 of 2022 requires all retirement plans to adopt auto-enrollment starting in 2025.
The Default Savings Rate Continues To Grow
Vanguard reports that as auto-enrollment rates rose, so, too, did the percentage of income that employees were saving.
In 2013, 50% of plans with auto-enrollment had a default savings rate of 3%, with only around 10% defaulting to 6% or more. However, the number of low-default plans fell as high-default plans rose until they were nearly equal in 2023. Last year, around 30% of plans defaulted to a savings rate of 6% or more and just 35% continued to default to the traditional 3%.
That, according to Fidelity, led to “record-high contribution levels” especially for middle class people but also for upper income households. This trend continued throughout 2024 and looks good to improve still in 2025.
It’s Easier Now To Save and Invest
Auto-enrollment in employer-backed retirement plans has helped elevate more middle-class families to millionaire status than anything else, but that’s just one element in a growing trend of hassle-free nest egg building. Even those who don’t have workplace plans, or who work for themselves, can open an IRA or Roth IRA for free with a few clicks and set up automatic recurring investments to secure their own retirements through their bank or a no-fee brokerage.
If they don’t know what they’re doing — or even if they do — anyone on any budget can use dollar-cost averaging to consistently contribute whatever they can to buy fractional shares of a low-cost index ETF for an instantly diversified portfolio.
“Enhanced access to retirement accounts, thanks to financial technology, has simplified investment management,” Klesinger said. “People can now easily track and adjust their 401(k)s online, increasing engagement and participation rates. Additionally, tax incentives for retirement contributions play a significant role in motivating individuals to save more.”
More People Are Saving Early and Often
Small, consistent contributions have always been more impactful than large, sporadic contributions, and the most immutable truth in investing is still that compounding needs time to work its magic. The continued rise of 401(k) millionaires shows that more people understand and are abiding by these foundational and effective concepts.
“Consistent long-term savings habits have also improved, likely driven by better financial literacy and awareness of retirement planning benefits,” Klesinger said.
Fidelity reported that “Long-term savers observed the greatest improvement, which is good news, especially for the more than 4.9 million workers that have been in their 401(k) plan for five years or more,” and that “The average balance for 5, 10 and 15-year continuous savers increased this quarter, with 15-year savers seeing a 7% increase in their account balances, demonstrating the value of consistently contributing in the same plan for an extended period of time.”
In short, stick with the fundamentals if you want to get rich.
“More people understand the importance of starting early and maintaining regular contributions,” Klesinger said.
Caitlyn Moorhead contributed to the reporting for this article.
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