How Americans define a middle-class lifestyle — and why they can’t reach it – msn/WaPost
“A poll from The Washington Post finds widespread agreement among Americans on what it means to be middle class. But just over a third of U.S. adults have the financial security to meet that definition, according to a Post analysis of data from the Federal Reserve. Americans also underestimate the income required for that lifestyle, suggesting that the popular image of middle-class security is more of an aspiration than a reality for most Americans.
“About 9 in 10 U.S. adults said that six individual indicators of financial security and stability were necessary parts of being middle class in the Post poll. Smaller majorities thought other milestones, such as homeownership and a job with paid sick leave, were necessary… Are you in the American middle class? Use our income calculator.
“Just over a third of Americans met all six markers of a middle-class lifestyle. While about 9 in 10 Americans had health insurance, only three-quarters had health insurance and a steady job. With each added measure of financial security, more Americans slipped away from the middle-class ideal.”
The six indicators of being “middle class” used in the survey are: having 1) health insurance and 2) steady employment; and the ability 3) to save for the future, 4) pay bills without worry, 5) afford emergency expenses, and 6) retire comfortably. Only 35% of respondents met all the criteria.
“The most common barrier was a comfortable retirement, something that about half of middle-income Americans over 35 felt they were on track to achieve.”
Sizing the Market for the Saver’s Match – EBRI
Most of the provisions in the recently enacted SECURE 2.0 aim at improving retirement savings and security for those already covered by the system. But about half of American workers have no retirement savings. One provision focused on increasing the savings of lower income workers is changing the current Saver’s Credit to a match, where the federal government would make a matching contribution to a qualified retirement plan of lower income workers. Scheduled to take effect in 2027, the match would be directly added to the individual’s qualified retirement plan after the worker applied for it.
While this improvement will help some low-income workers, it’s doubtful it will dramatically lower the percentage of workers with no retirement savings. Many simply don’t have sufficient earnings to contribute anything to trigger a matching contribution. Millions also work in jobs offering no retirement plan. The next round of retirement security legislation should create a universal system based on two key elements: 1) a modest government contribution to a retirement plan for ALL workers, regardless of whether they can afford to match, and 2) the government contracting with a fiduciary organization to manage the investment of its contributions on behalf of workers without access to employer retirement savings plans. SECURE 2.0 lacks either of those key elements. See:
– Op-ed: Half of Americans have no retirement savings — here’s how Congress can look out for them.
– How the U.S. Retirement Saving System Magnifies Inequality