How to Gauge Your Middle-Class Status (USNews.com)

Discussion in 'Economics' started by TraderZones, Mar 25, 2010.

  1. How to Gauge Your Middle-Class Status
    by Rick Newman
    Tuesday, March 23, 2010
    provided by

    Assessing Your Middle-Class Status

    Despite the so-called recovery, many families continue to struggle, with income and other living standards slipping below thresholds that typically represent middle-class quality of life. We've assembled a variety of metrics to help determine whether you're getting ahead, holding steady, or slipping further than most.


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    Income

    For the 50 percent of families in the middle of the scale, household income ranges from $51,000 to $123,000 for a typical four-person, two-parent family. The median is about $81,000. Those numbers are from 2008, and have probably fallen 5 to 7 percent since then, on account of the recession. Median income for a single-parent, two-child family is about $25,000.

    Housing Costs

    For two-parent families, the typical home is worth about $231,000, accounting for $17,600 in mortgage payments and other costs per year. Housing costs have risen by more than twice as much as income since 1990, a trend that may finally be reversing thanks to the housing bust.

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    Home Size

    The housing bubble was one factor that boosted housing costs, but the typical family also lives in a much bigger home. The median size of a new, single-family home jumped by 40 percent between 1979 and 2007, to about 2,300 square feet. That may now be declining, as families downsize and some get booted from homes they can't afford.

    Medical Expenses

    You've probably heard — healthcare costs are going through the roof. A study by the middle-class task force headed by Vice President Joe Biden says the median two-parent family spends $5,100 per year on health insurance and non-covered expenses—assuming an employer provides health insurance. Healthcare costs have risen far more than any other aspect of the family budget since 1990, with no end in sight.

    Cars

    They provide mobility and represent freedom, one reason the typical family spends about $12,400 per year on two medium-sized sedans or the equivalent, with a new-car value of $45,000. The recession may have dampened our love of the road, however: Americans are driving less and car sales are off about 40 percent.

    College Savings

    The typical family puts aside $4,100 for college expenses for two kids, estimated to cover about 75 percent of expenses at a state university. Financial aid helps with the rest. But if possible, toss more into the college fund: As states face budget crunches, tuition and fees are going up.

    Vacations

    One week at the beach or another destination is standard, at a cost of $3,000 or so for four. More affluent families can afford two weeks, at a typical cost of $6,100.

    Retirement Savings

    A median-income family that saved 3.2 percent of its income—roughly equivalent to the national saving rate—would sock away nearly $2,600 per year for retirement. Of course many families don't hit even that modest goal, and stock-market losses over the last several years have further shrunk the national nest egg.

    Everyday Spending

    Clothes, food, utilities, entertainment and other living expenses amount to $14,200 a year for a median-income family. Not surprisingly, this is one set expenses many families are trying to reduce, by buying more discount brands, using less or doing without.

    Number of Earners

    In 76 percent of two-parent families, both parents work. The higher the household income, the more likely it is that both parents are contributing.

    Hours Worked

    Few parents will be surprised to hear that Moms and Dads are working more than they used to. The total number of hours worked in a two-parent family is 3,747 per year, up 5 percent since 1990. The increased hours add up to more than four 40-hour weeks of additional work per family.

    Education

    The typical household head has a high school degree plus about two years of college education, up by more than a full year of college since 1990. Good thing—education is a key factor in lifetime earnings, and high school dropouts face a dim future by nearly every measure.

    Free Time

    What's your top priority? In a 2008 poll by the Pew Research Center, it wasn't healthy kids, a strong marriage or a great career; 68 percent of respondents said it was free time. (And just 12 percent said it was being wealthy.)

    Household Net Worth

    The typical household has a net worth of about $84,000, according to the Federal Reserve. That's down 30 percent since 2007, thanks to losses in stock portfolios and home values.

    Debt

    About 18 percent of disposable income, on average, goes toward mortgage payments, auto loans, credit cards and other forms of household debt. That's a bit higher than it was in the '70s and '80s. But since debt payments peaked at the beginning of 2008, at 18.9 percent of income, they've been steadily falling.
     
  2. lrm21

    lrm21

    Wheres the section on Taxes?

    Oops

    Don't want to point out that most middle class American's now put away more to the Federal, State, Local government then their own retirement or savings, or vacations.

    Thats pretty much the breaking point, which would explain why entitlements are fucked. Without entitlements even the middle class are fucked.

    So you work to pay for entitlements, where the Gov takes its cuts strips off money for the unions, and then sends you a little candy at the end of the year.

    Well, this will not end well.



    :D
     
  3. +1
     
  4. Interesting to see how I rate. I will list my stats as an average middle class person. I would like to see some of you others put your stats up and see how you rate. First...I am a 2 parent family of 4.

    One Income: about 55k per year after taxes. Article says average income range 51k-123k

    Home value 219k with $13k in housing costs Avg in article, 231k with 17.6k in housing costs

    House size 1300 sq ft. Article says avg 2300 sq ft

    1 car (paid off) costs per year(ins/gas/maint) about $3k. Article says 12k avg.

    College savings for kids: Zero They need to earn it themselves. Avg in article 4.1k

    Vacation 3 weeks, $5k. Avg in article 1-2 weeks at 3-6k

    I put away about 10-15k per year in savings which is 18-27% of my income. Article avg, 3.2% or $2.6k

    Everyday spending about 15-20k per year. Article avg 14k

    # of earners 1. Average 2

    # of hours worked 3400 (although I dont know that spending all my time on the computer counts as work) Avg 3747

    education 2 years college(maybe 4 years total schooling if you counted all the trades I learned in trade schools.)

    Top priority God. Article says top priority is free time. In a way though I guess free time lets me think about God, so maybe thats the same thing.

    Household net worth about $300k give or take. Average 84k

    Debt None (except for mortgage on my house which is about 170k or so)

    I think the article is wrong on some of the facts because it says the average person has 84k net worth,yet we just saw an article on here somewhere that says most people dont have even 10k saved for retirement. And it also says 18% of disposable income goes to mortgage credit cards, auto loans and other debt, which i think is wrong because my mortgage is 27% of my income. I doubt most people pay their credit cards, auto loans and mortgage with 18% of their income, unless they mean that after they pay 33% of their income towards mortgage they have to add another 18% to go to mortgage because they are over debted.

    Anyway...now you know my finances everyone. I hope some of you also put up your finances to see where you rank. Please dont be embarrassed if you have negative net worth, lots of debt, or little net worth. If you are too embarrassed, make another alias. I really would like to see how some people on here are doing as i think many others would too.
     
  5. Sometimes I feel like you Americans really need to kick the military industrial complex to the curb. As a Canadian, I have lower taxes and more social services... think about it.
     
  6. clacy

    clacy

    Yes, because your neighbors to the south subsidize your security. Do you really think that the Russians wouldn't man handle the entirety of your natural resources were it not for the US?
     
  7. bozwood

    bozwood


    Must be nice to not have to spend on that military complex. Wonder why that is?
     
  8. It's not necessarily about defense, comon. The US has almost 1000 international bases around the world for offense and waging wars. If it were about defense, those numbers could come down to whatever a region like Europe spends. But right now the US spends as much as the rest of the world combined, and it's not to the benefit of the average American.