When you reach your 50s, it’s natural to start thinking about your financial status and how yours compares to other people the same age. The Brookings Institution defines the middle class as making up 60% of Americans, so most of us fall into that group. But what does that actually mean in terms of your net worth?
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Here’s the minimum net worth you need to be considered middle class in your 50s.
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Average Net Worth By Age
The Survey of Consumer Finances conducted by the Board of Governors of the Federal Reserve System measures the average net worth of Americans by age. The survey showed the average net worth of families by the age of the “referenced person,” defined as the male adult in a heterosexual couple, or the oldest person in a same-sex couple.
The median net worth in 2022 of a family with a “reference person” aged 45 to 54 was $247,200. For a family with a reference person aged 55 to 64, it was $409,900.
The mean net worth in 2022 was $975,800 for a family with a referenced person aged 45 to 54 and $1,566,900 for a family with a referenced person aged 55 to 64.
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A quick refresher for those who may have slept through statistics class: The median is the net worth of the person in the middle of the list of people in order of their net worth. So, if you have seven people, the median is the fourth person on the list. The mean is determined by taking the combined net worth of all the people, adding it up and dividing it by the number of people on the list.
The median is the relevant number here, because someone with the median net worth has a higher net worth than half the people in the country and a lower net worth than half the people in the country, making them exactly “middle class.” But it’s interesting to see what would happen to net worth if all the money in the country were distributed evenly, as mean net worth is defined.
What Is Middle Class?
The definition of middle class can vary depending on who you’re talking to. It generally implies those people who are in between the working class and the upper class. Pew Research Center defines upper, middle and lower classes by income, not by net worth. The think tank defines middle-income households as those that earn between two-thirds and double the median household income in the U.S.
The Brookings Institution defines the middle class as the middle 60% of households on the bell curve of income distribution. Since income impacts wealth accumulation over time, this is relevant to the question of net worth.
What Income Do You Have To Have To Be Considered Middle Class?
The Pew Research study indicates that 52% of Americans aged 45 to 64 are middle class. That age group has the highest percentage of middle-income earners, as the percentage in the middle class increases with age, beginning at 18, until age 65, when it falls to 50%.
According to Pew Research, the number of Americans who are considered middle class is declining. In 1971, 61% of Americans were “middle income.” By 2023, that share had dropped to 51%. The upper class grew by a larger amount, from 11% to 19%, than the lower class, which went from 27% to 30%.
Middle-income households in the U.S. had a median household income of $106,092 in 2022, according to Pew Research. (This amount assumes there are three people in the household, is expressed in 2023 dollars, and includes all age cohorts.)
Net worth is just a number, however, and “middle class” is just a classification. The real question is whether your financial situation is comfortable and provides you and your family with the life you want.
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This article originally appeared on GOBankingRates.com: Here’s the Minimum Net Worth To Be Considered Middle Class in Your 50s
