According to a recent article in the WSJ, more and more Americans are getting richer despite an adverse macroeconomic environment. Here is what they classify as upper middle class based on income.
….[Upper Middle Class] is classified a family of three earning $133,000 to $400,000 (in 2024 dollars). Households earning more were categorized as rich. Many families are surprised to find that they have moved into this new economic tier, and see themselves as comfortable, not rich. They tend to have jobs that are white collar but not flashy—think accountants, not tech founders.
Do you agree with this? Overall it seems accurate, but it also largely depends on where you live and your spending habits. For example someone in NYC earning $400,000 would likely be middle class given the high cost of city living. In South Dakota or Kentucky they would be considered rich based on this income level.
But ultimately, It’s not what you make but what you save and invest. Also like most people your income will vary in life based on several factors like your job, health and lifestyle, which means high income does not equate to longer term wealth.
That’s why I like this 5 step guide for getting rich over the longer term in America (comes down to discipline):
- Make an upper middle class income (150k+). This means having the skills (college, trade or other) that aligns with what the labor market is willing to paying for (which is all about AI now), which may not be something you love.
- Live below your means, even as your income rises. This means avoiding lifestyle creep and carefully managing your car, house, and education expenses for kids.
- Invest the difference (ideally 25%+ of gross income) in low-cost index funds
- Repeat for 2+ decades
- Retire Rich.