Who counts as upper-middle class?

At a Glance:

• • “Upper-middle class” is subjective, but two objective ways to measure it are net worth and income

  • We used the 75th to 90th percentiles for both to define upper-middle class

  • Real estate investing can help you get there faster here’s how

The term “upper-middle class” really refers to a degree of comfort in your income, in your wealth, in your lifestyle, and in your education, in your mindset.

But that feels awfully nebulous, so we decided to dig into some actual numbers.

A landmark survey by Pew Research a few years back found that almost all Americans consider themselves middle class. No, really: just 10% of Americans self-identify as lower class, and just 1% of Americans identify as upper class.

But it’s a little ridiculous to argue that 89% of Americans are middle class. The term loses all meaning at that point.

I contribute to GoBankingRates as a financial writer, and they ran an interesting study earlier this year. They defined “middle class” as those earning between two-thirds and double the median income.

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Nationwide, that comes to around $54,000 – $161,000.

Of that bracket of middle class earners, they then identified the top third as “upper-middle class.” In some states, you can count as upper-middle class with incomes as low as $85,424 (Mississippi). In others, you need a minimum of $158,126 (Maryland) to qualify.

Personally, I find that definition a little low.

Using Percentiles to Define Upper-Middle Class

In a recent YouTube video breakdown, Deni and I proposed defining the upper-middle class as those earning between the 75th and 90th percentile in income.

That puts the nationwide average in the range of $144,770 – $234,769 household income, based on Current Population Survey data. That feels closer to accurate to me.

Alternatively, you can define upper-middle class through net worth instead of income. Using the same bracket, you’d need a net worth between $658,340 (75th percentile) and $1,920,758 (90th percentile). That too feels about right for upper-middle class.

Again, it depends on where you live though. An $175,000 income in Manhattan, Kansas goes a lot further than a $175,000 income in Manhattan, New York.

How to Join the Upper-Middle Class Faster

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If you want to join the upper-middle class (or upper class, for that matter), it helps to earn more money.

Get a raise. Change careers. Pick up a side hustle. That will move the needle faster than anything else.

It also helps to add passive income streams. Earlier this month, the Co-Investing Club invested in a secured note paying 15% interest. We regularly invest in private equity real estate deals paying 8%+ in distributions, on top of another 8-10%+ in annualized profit returns.

Paying less in taxes helps too. Real estate syndications now let you write off 100% depreciation in the first year, which can offset your capital gains and distributions from past investments. We call this the “lazy 1031 exchange” strategy – just keep reinvesting in new syndications to keep deferring taxes!

Learn how to invest for asymmetric returns. Why do you think we vet investments together as a club every month? To help spot high potential returns with moderate potential risk.

Curious to join these deal discussions firsthand? Join the Co-Investing Club at the Free membership level. Come see what we’re investing in and how it works, to decide whether it’s for you or not.