Here's the annual income you need to fall in America's lower, middle, and upper class — plus 3 simple tips to pull yourself up the ladder (2024)

We might be well into 2023 now, but millions of Americans are still reeling from the financial strain of 2022. And perhaps that’s because many of the causes that made last year so tough — stubborn inflation, sky-high interest rates and supply chain disruptions — are still hanging above our heads.

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But once you factor in the ever-increasing consumer debt load, you’ve got the makings of class disruption, with many Americans poised to slip a run or even two in terms of their status.

So where do you fall in terms of belonging to the lower, middle or upper class? Here’s what we found, along with three ways to set yourself up to climb even higher.

Lower, middle and upper-class income

According to the U.S. Census Bureau, the median annual income for Americans in 2021 was $70,784. How this breaks down in terms of class strata can get complicated: living on $70K in rural Montana is a lot different than in downtown Manhattan: location, location, allocation, you might say.

Still, the Pew Research Center has done commendable work turning census data into meaningful benchmarks. In a 2022 report, they found that the median income of middle-class households in 2020 was $90,131 — up 50% from $59,934 in 1970, as measured in 2020 dollars.

Using 2018 figures, Pew defined class-income breakdown in 2020 (based on three-person households and adjusted for the cost of living in a metropolitan area) like this:

• Lower-income households had incomes less than $48,500;

• Upper-income households had incomes greater than $145,500;

• Middle-income households fell into a range between those two numbers.

But the report also pointed out that geography plays an important part in where you fall on the scale. Locationally, Jackson, Tenn. is 19% cheaper than the national average, while the San Francisco-Oakland-Hayward is almost 32% more expensive.

You might wonder where you fall and if so, you’re in luck. The 2020 Pew report contains a calculator that lets you determine your class strata. All you have to do is enter your state, metro area, pre-tax household income and number of family members.

Keep in mind the data is from 2018, but it’s a great starting point to give you an idea of where you stand — and how much further you have to go before hitting the next rung. Here are a few tips to help speed up that process.

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Invest in yourself

To be clear, “invest in yourself” means taking steps to build on your skill sets and literal worth in the job market, or upward position as an entrepreneur. Advanced degrees and specialized training will prepare you for the leap.

A study by Georgetown University found that individuals who held a bachelor's degree earned on average 31% more over a lifetime — for a total of $2.8 million on average — compared to those with an associate’s degree, and 84% more than those with a high school diploma.

The decision to seek out high-demand skills can increase your earning potential even faster, and boost your wealth in the process.

Build a budget

Of course, college, grad school or advanced training requires money. That’s where it helps to leverage expenses alongside income — which is where making a budget comes in. That’s more crucial than ever in our post-pandemic world.

Ramsey Solutions found in its 2023 State of Personal Finance report that the number of Americans who reported difficulty paying bills increased by 42% over the last two years, while more than one in three Americans who make more than $100,000 a year live paycheck to paycheck.

The budgeting process need not be complicated; often it’s more psychologically taxing than anything else. Learning that you eat out twice a week or have expensive subscriptions you haven’t used in years can make you feel vulnerable.

The idea here is to keep your larger goals in mind. Stay stubbornly focused on them instead of beating up on yourself. After all, cutting expenses is the true equivalent of getting a huge raise or coming across “found money.”

Diversify your investments

Again, Americans face a bevy of psychological roadblocks here. Following headlines about a blockbuster stock (and experiencing FOMO) has more in common with playing Powerball than building a powerful portfolio. To that end, diversification is crucial.

Would you rather find and invest in the next Amazon? Dump it all into cryptocurrency? Keep in mind that the media and your boastful buddies love to share the success stories. But diversifying and playing the long game — which also employs a buy-and-hold strategy — made billionaires out of Warren Buffett, Charlie Munger and Charles Brandes, to name a few investment titans.

Growth stocks like Tesla and Amazon have their places in a diversified portfolio, but the idea is to balance them with more conservative investments, including bonds and established companies that deliver steady gains and dividends. A mix of conservative stocks, growth stocks, bonds and real estate will in general provide a safer way to achieve your long-term wealth goals. Exchange-traded funds (which peg their value to the S&P 500, for example) are also a great idea in that they contain a ready-made basket of investments.

No matter the class you occupy or seek, keep in mind those other investments that build riches over time: family bonds, quality leisure time, relationships and passion projects among them. To borrow from the late Stephen Covey, make sure as you climb the ladder to success that it’s leaning against the right wall.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.