When it comes to money, identity, emotion, circumstance, and even location can play just as big of a role as dollar amounts. For many years most Americans identifed as middle class even if they fell above or below the official middle income range. Middle class has become an identity nearly synonymous with the core American identity. The feeling of being middle class has never exactly matched up with numbers, but the trend has reversed in recent years, with fewer Americans feeling like that fit the classification.
According to Pew Research Center, half of the U.S. adult population lives in middle income households. Pew defines middle income as those with an annual household income that was two-thirds to double the national median income in 2020, or about $52,000 to $156,000 annually in 2020 dollars for a household of three.
While it might be encouraging to know half of the adult population is considered middle class, that number isn’t as impressive as it sounds. Although household incomes have increased considerably since 1970, the share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021 (the last time Pew did an analysis of government data).
In fact, that 50% number has been holding steady for the last decade, says Pew Senior Researcher Rakesh Kochhar. “The middle class is no longer shrinking but it hasn’t reversed its course either,” he adds.
Regardless of how Pew defines middle income, how we feel about our own economic status has less to do with government data and everything to do with our perceptions when we pay our monthly bills, buy groceries, or go out to dinner.
A Gallup study finds that middle- and upper-middle class identification remains lower than it was before the Great Recession. Since then, Americans have been more likely to call themselves members of the working or lower class. “People are less likely to be able to see themselves as achieving that status,” says Gallup Senior Editor Jeff Jones.
We asked three middle class families from different income levels to share a snapshot of their yearly earnings and expenses, as well as how much they save and invest. While they are all comfortable, they all talked about having to make financial choices and trade-offs. Their location, family situation, and where they fell on the middle class income scale all had a big impact.
“I know I’m not doing it wrong but feel like I could do it better.”
Family: Vivienne, 43, freelance writer and editor, and Tyler, 42 photographer, and their two children ages 7 and 5
Location: Kansas City, Missouri
Income after taxes: $89,450
Annual expenses:
- School costs: $7,200
- Babysitting for after school and nights out: $300
- Mortgage: $8,940
- Home maintenance/improvement: $2,000
- Property taxes: $2,326 on home; $842 on three vehicles (Missouri has a vehicle property tax)
- Home insurance: $1,356
- Car insurance: $3,000
- Gas: $5,000
- Vacations: $10,000 The family took three vacations last year—two weeks in Spain, a week in the Bahamas, and a week in Florida. They relied heavily on points to pay for airfare and lodging.
- Life insurance: $1,428
- Health insurance: $7,332
- Private lessons or afterschool programs: $900
- Clothes: $700
- Charity: $6,000
- Utilities: $6,910
- Groceries: $10,000
- Pension contributions and retirement savings: $2,465
- Health Savings Account: $7,750
- Haircuts: $400
- Gifts: $1,000
Annual expense total: $85,849
Amount remaining: $3,601
“I feel like I’m constantly behind,” Vivienne says. “We do have an emergency fund and do have investments. I know I’m not doing it wrong, but feel like I could do it better.”
The couple noticed a dip in their income when their children started private school. Vivienne and Tyler are both self-employed, so they didn’t have daycare expenses.
Although Vivienne is aware that grocery prices have gone up, she says it hasn’t been a pain point. “We shop conservatively, mostly at Aldi and Costco, to find the best prices,” she says.
However, the couple is trying to cut back on mindless spending. “This year I’m more conscious of whether I need to buy coffee at coffee shop,” Vivienne says. They have also cut back on going out to dinner. “When you have to add on babysitting that dinner is really expensive,” she says.
Tyler owes about $10,000 in student loan debt, but only had to make two payments in 2023, totaling $352, because student loan payments had been paused since March 2020. The couple also owes $15,000 on a zero-interest credit card and plans to sell their RV to help pay off that debt.
Most of their discretionary spending goes toward travel. Last year, the family went to Spain for two weeks, using points from a trip that was canceled during COVID. When they travel, they try to stay in an Airbnb, so they don’t need to buy breakfast in a restaurant. “Plus, food prices in Spain are cheap,” she says.
Tyler and Vivienne are aware they need to shore up their retirement. Vivienne also would like to replenish their emergency savings account, which they dipped into last year to pay for a medical emergency. They also need to start saving for their children’s college tuition, she adds.
However, Vivienne admits they have some advantages. Their home, which they purchased in 2008, is almost paid off. “I’m not worried about paying the mortgage or where my next meal is coming from,” she said. “I don’t feel insecure, but I definitely don’t feel rich.”
“There is something to be said for living in the flyover state.”
Family: Carrie, 47, part-time librarian at public library, and Jake, 48, software engineer/project manager, at a pharmaceutical company with two children ages 13 and 14
Location: Indianapolis, IN
Income after taxes and other payroll deductions (include 401(k) and healthcare): $102,000
Annual expenses:
- 529 college savings plan: $5,000
- School costs: $1,600 for sports fees, including rentals, uniforms, and tickets to watch the games.
- Part-time summer nanny: $1,500
- Mortgage: $7,956
- Home maintenance/improvement: $2,000
- Property taxes: $3,800
- Home insurance: $2,600
- Car insurance: $850
- Gas: $6,000
- Vacations: $3,500, usually one big vacation a year
- Private lessons or afterschool programs: $1,400
- Clothes: $5,000
- Charity: $18,500
- Other expenses: $1,200 for pets’ food, grooming and medical care
- Groceries: $8,400
- Dining out: $4,800
- Haircuts: $620
- Gifts: $3,800 (birthdays and holidays for family members)
- Orthodontist: $5,000
Total annual expenses: $83,526
Amount leftover: $18,474
Carrie and her husband, Jake, received sizeable increases in their annual salaries last year. Carrie’s employer, the Indianapolis Public Library, gave every employee a bump in pay and Jake left a nonprofit job to work for Eli Lilly. “We got really lucky when we both got pay increases at a time when the cost of living is increasing,” she says.
Groceries and eating out have become more expensive, Carrie says. “What used to be the non-sale price is now the sale price.” For instance, the sale price of chicken is now $2.29/pound rather than $1.99/pound. Carrie has seen her weekly grocery bill increase from $150 to about $200.
Trips to McDonald’s after sports practices cost more too, Carrie says. “I used to be able to get away with spending $8 dollars, now it’s $16,” she says. “If a soda was $1, now it’s $1.30.” Instead of telling her daughters that they can order anything, she suggests they order off the Value Menu. “I talk with them about the prices and how they’ve gone up and what it means,” she says.
Although Carrie and Jake are 47 and 48, saving money in a 529 for college is taking priority over saving for retirement, Carrie says. “I’ve been trying to get them to agree to go to an in-state college since the moment they were born,” she says.
However, the couple has several financial advantages. Jake’s employer offers a 401K match, and the couple bought their home in 2010, during the housing crisis. The couple doesn’t have any student loan or credit card debt. “We didn’t have to struggle to buy a house or pay for a lot of things because it’s cheap to live here,” she says. “There is something to be said for living in the flyover state.”
“I grew up not having a lot of money, the Middle Class was something to aspire to.”
Family: Jason, 55, high school math teacher, and Shannon, 54, grocery store co-owner and associate director at the St. Louis Science Center, and one child, age 16
Location: St. Louis, MO
Income after taxes and payroll deductions (including 401(k) and insurance): $92,000
Annual expenses:
- ROTH IRA contributions: $6,000
- Mortgage: $12,924
- Property taxes: $3,200
- Home insurance: $1,325
- Car insurance: $4,800
- Gas: $3000
- Vacations: $5,000 Typically one big family vacation in the summer with shorter trips during the year.
- Clothes: $1,200
- Charity: $1,200
- Utilities: $3,680
- Entertainment: $2,400
- Health/wellness $2,700
- Shopping, including gifts $10,200
- Haircuts, $360
Total annual expenses: $57,989
Amount left over: $34,011
Jason says they don’t live extravagantly. “We buy what we need.” For instance, they recently bought a new car because the old one died, but when his wife, Shannon, needed to buy new clothes, she shopped at a secondhand store.
Anything that costs $100 or more is scrutinized before purchase, Jason says. “I grew up not having a lot of money and the Middle Class was something to aspire to,” he says.
The couple admits they have several financial advantages. They bought their home in 1996, so their mortgage is reasonable. Shannon co-owns a grocery store, so they receive a portion of their groceries for free, Shannon’s cell phone is paid for by the store, and the couple earns about $20,000 in dividends from the store each year. Jason, who works as a high school math teacher, receives a pension. The couple also has no student loan debt and carries no credit card debt.
Their biggest financial worry is paying for their 16-year-old son’s college tuition. “I want to be able to pay for at least some of the tuition rather than having him take out loans,” Jason says. If they can’t find extra money for tuition, Jason says he will use his Roth IRA. “Shannon and I were not saddled with student debt and would like him not be saddled with it either,” he says.
