Money

Family making $100,000: We're 'technically in the upper-middle class, but it sure doesn't feel like it'

The American dream has changed, but it isn't dead, new Georgetown University research reveals.
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The American dream has changed, but it isn't dead, new Georgetown University research reveals.

Jacob Hugart makes more than the typical American: His $100,000 salary is nearly double the median annual income in the United States.

"My understanding based upon incomes is I'm technically in the upper-middle class," he told NPR's Lulu Garcia-Navarro during a segment on living on $100,000 a year, "but it sure doesn't feel like it."

He and his family live in St. Paul, Minnesota, and while his income is "sufficient for our day-to-day living," Hugart says, they still struggle with expenses that come up: "We had to repair our roof a couple of years ago, and we ended up cashing out an IRA in order to pay for that because the other alternative was to put it on a credit card."

The oldest of their three kids is going to college soon. Though "we do have some funds that we have saved up for him, given the cost of college, it's certainly not going to be enough," Hugart says.

The Hugarts aren't the only Americans earning six figures and yet still having a hard time setting aside money for retirement, college and other major expenses. One Georgia-based couple earning $180,000 doesn't "feel wealthy," nor do they "have a bunch of money stashed away anywhere," they told the Washington Post.

Financial expectations have changed over the past several decades as prices have risen while wages haven't kept pace. As Richard Rubin, economy reporter for the Wall Street Journal, tells Garcia-Navarro, "We've seen costs go up for things that seem like core parts of the middle-class life," such as health care and education.

"So even if food prices or electronic goods or other things have not gotten more expensive, those things — health care and education — have gotten more expensive. And so what it feels like to be middle class now can be different from what it felt like 25, 30, 40 years ago."

That's why some even say that "millionaire is the new middle-class."

No matter your income, almost anyone can begin saving for the future. Even if you just set aside a tiny percentage of your income in a retirement account, it's better to start small than to not get started at all.

Start by investing in your employer's 401(k) plan, a tax-advantaged retirement savings account, or other retirement savings accounts, such as a Roth IRA or traditional IRA.

If kids are in your future, you may want to consider opening a 529 savings plan to start putting money away for their education. And no matter your situation, start building a rainy day fund that will cover three-to-six months worth of living expenses.

Read up on other smart money moves to make starting now:

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