Are You Officially Middle Class?

What does “middle class” mean to you? For many (especially Gen X and baby boomers), it means homeownership. But that’s a hard standard to live up to…

As we told you last week, using the standard of committing no more than 30% of your income to housing, you need to make roughly $77,484 a year to afford the median national rent of $1,937. 

To afford to buy the national median-priced home, you must bring in more than $128,000 annually. This is based on the $3,206 monthly payment (including taxes and insurance) that results from a 10% down payment ($42,450) on a $424,495 property (March 2023 Realtor.com median list price) and a 30-year mortgage at a 6.7% interest rate.

That’s objective data, holding all other variables constant. 

You might not make anywhere near $128,000 and still feel middle class. 

Maybe you’re one of the lucky ones paying much less monthly, thanks to a 2% to 4% interest rate on a home that didn’t cost half a million bucks when you bought it. Or maybe you inherited property from a relative and live mortgage-free. 

On the other end of the spectrum, maybe you bought a home a few years ago when you could objectively afford the monthly payment. Then your income dropped and/or some expenses increased. You can barely make ends meet while keeping a roof over your head. 

Ultimately, class comes down to disposable income. The more you can spend freely on things you don’t need, the more middle class (or higher) you might feel. Since housing is most people’s biggest monthly expense, the less you pay for this line item, the further the money you bring can take you. 

But there’s an objective definition of middle class…

Naturally, it depends on where you live. 

Fremont, California, is a city in the San Francisco Bay Area. According to research from SmartAsset, households there need to make at least $104,499 to be middle class – the highest minimum of the middle-class threshold in the data. Fremont’s middle-class bracket extends to just under $312,000. For the record, 10% of the people who live there work for Tesla (TSLA). Thus a range that’s high even for California.

In #2 San Jose, the middle-class range is $84,673 to $252,754. Other cities in SmartAsset’s top 10, such as San Francisco, Seattle, and Plano, Texas, have similar ranges.

On the low end, you need to earn only between $23,827 and $71,124 to be middle class in Cleveland. Rust Belt cities Detroit and Buffalo have similar ranges. 

At the state level, Mississippi ($32,640), West Virginia ($34,336), and Louisiana ($34,898) have the lowest middle-class income requirements. At more than $60,000, Maryland, Washington, D.C., and Massachusetts have the loftiest barriers to being middle class. 

The Bottom Line: Whether you’re middle class based on your city’s median income can be fun to look at. But the way you feel is certainly more important. If you don’t feel middle class, reassess what you pay for housing. 

Lower your rent payment or pay off your mortgage and you’ll likely at least feel middle class in no time. The more free cash flow you have, the better you’ll feel about your financial place in society.

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