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Will You Have a Middle-Class Retirement?

Tom Sightings

What is middle class in America today? According to a definition from the Brookings Institution, the middle class comprises families with incomes between one-half the median income and twice the median income. Today this would make a middle-class annual income range from about $25,000 to $100,000.

But your location and your situation make a big difference. If you're trying to raise a family on $100,000 a year in New York, Washington or Los Angeles, you're barely scraping by. If you're a retired couple without kids in Macon, Ga., or Mason City, Iowa, you're among the richest people in town.

However, it seems that most Americans consider themselves middle class, regardless of any objective standard. And perhaps that's the only definition that really counts. Most doctors, lawyers and business managers think of themselves as middle class, even if they're making $300,000 or $400,000 a year. Most cops, teachers and civil servants consider themselves middle class, even though most of them make less than $100,000 a year and many make much less than $100,000 a year.

Surely, if you're among the so-called 1 percent--people making over $500,000 a year--you're considered rich, upper class and part of the elite. On the other end of the income scale, people on welfare, food stamps or who live in Section 8 housing might fall into the underclass, although according to the National Center for Opinion Research, some 36 percent of people earning less than $15,000 a year call themselves middle class.

But what about us retired folks? The average Social Security retirement benefit is about $15,000 a year. So if you live on Social Security alone, can you claim to be middle class? If not, how much of a pension, or how big a balance in your IRA does it take to qualify?

One characteristic of middle class people, according to the U.S. Dept. of Commerce report Middle Class in America, is that they plan for the future and try to control their own destiny. People in the middle class buy insurance and save for retirement. So if you have any sort of retirement fund at all, that may by itself qualify you as a member of the middle class. But, again, the amount you need to have built up in your retirement plan depends as much on where you live as how you live.

By objective standards, the middle class has been shrinking for the last four decades. The Pew Research Center determined that in 1970 some 60 percent of American adults lived in middle-income households. Today it is down to 50 percent. But as Middle Class in America points out, membership in the middle class is not just about income. There's a cultural aspect to the middle class that involves work, education, family and community. Do you need to be a high school graduate to be in the middle class? A college graduate? Do you have to own your own home?

A lot of retired people might think that based simply on earnings, they are no longer a part of the middle class. But they might have other resources, as well as the foundation of a middle-class education and middle-class values. As one person said, "Our income says we are poor. Our shopping says we are middle class. Our house says we are rich."

Despite the importance of the middle class in American legend and lore (not to mention politics), some people don't want to be associated with the middle class. For example, a lot of people living in the university environment, as well as artists of all types, would rather be caught dead than lumped in with the boring middle classes who they consider square and unimaginative.

Many city residents, especially young hipsters in places like Brooklyn or The Mission, take pains to hide or deny their solid middle-class roots. These people think they're special in some way. And one thing we know about those of us in the middle class--people who shop at Target, dine out at Chili's, vacation at Disney World and live in suburban developments: We may be comfortable, but we are not special.

So are you middle class? There are many measures. But in the end, only you know for sure.

Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.

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