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10 Signs You’ll Retire Comfortably in the Middle Class

AleksandarNakic / iStock.com

AleksandarNakic / iStock.com

Defining the middle class is tricky. According to the Pew Research Center, you could be considered “middle class” if your household income is two-thirds of the national median income, or $47,189 to $141,568. This is a broad range that doesn’t necessarily take into account factors like household size, location, or individual needs beyond the essentials.

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But if income isn’t enough to determine whether you’re on track to retire middle class, what is? GOBankingRates spoke with several financial experts about this. Here are some of the top signs they say you’ll retire comfortably in the middle class.

You have a feeling of ease

Although you may not be able to buy a yacht or a second vacation home, financial stability provides a feeling of ease.

“Being from a working class background and having moved up the socioeconomic ladder, I can tell you from experience the signs that I had moved into the middle class,” said Jennifer P. Kirby, fiduciary financial advisor and managing partner of Talisman Wealth. Advisors.

“Even though there are financial markers for the middle class, there is also a sentiment. It’s a feeling of greater stability, that making ends meet isn’t as difficult, that you’re no longer one problem away from financial peril. Overall, you feel like you don’t need to track every penny you spend, that you can catch your breath and know that things are relatively stable.

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You have access to quality healthcare and education

If you have access to high-quality health care and education, this could be a sign that you are on the verge of retiring into the middle class.

“In the middle class, you have access to a better quality education for you and your children. That could mean attending private schools or being able to afford college,” said Sherman Standberry, licensed CPA and managing partner of My CPA Coach. “Additionally, being middle class also allows you to benefit from better health care options, ensuring that you and your family have access to quality medical care.

You have no debt

Middle-class people still often rely on some form of debt – car loans, student loans or mortgages – to finance their lifestyle. But if you’re nearing retirement, you should be on track to pay off all your existing debt, if you haven’t already.

“Being debt-free is another sign that you will retire middle class,” Standberry said. “It’s important to pay off any outstanding debts before you retire, as this will free up your income and allow you to live comfortably during retirement. Being debt free also means not having to worry about making payments or accruing interest, giving you peace of mind during your golden years.

You have a diversified investment portfolio

Another indicator that you will retire comfortably in the middle class is that you have a diversified investment portfolio, said Garrett Smith, financial advisor and CCO at Ascend Investment Partners.

This portfolio should ideally include retirement accounts, including 401(k)s or IRAs. You must also contribute regularly to these accounts without financial hardship.

You have a clear budget

“The best sign that you will retire middle class is if you understand your complete financial picture and can create a budget that allows you to live within your means,” Kirby said. “This is the secret to any retirement, regardless of socio-economic level.”

You might still face some limitations based on your income or plan. For example, you may need to downsize or reduce your living expenses once you retire. But you also have realistic expectations about your retirement budget and you’re happy with that.

You have a realistic retirement plan

If you have a realistic retirement plan and your finances are keeping pace, you might be on the right track, too.

“To retire in the middle class, it is important to have a solid retirement plan in place,” Standberry said. “This could include contributing to a 401(k) or IRA, investing in stocks or real estate, or even starting your own business. Having a well-thought-out retirement plan ensures that you will have enough income to support yourself during your retirement years.

You can handle basic financial emergencies

You may not have enough cash to deal with all financial emergencies, but you don’t worry too much about basic situations, like car or home repairs, because you have a cash fund. emergency.

“Having an emergency fund to cover unexpected expenses and some level of savings or investment for future goals like retirement or education demonstrates financial preparedness, a characteristic of the middle class,” a said David Reyes, founder of Reyes Financial Architecture.

You can splurge every once in a while

Middle class people generally have more choices when it comes to money. They don’t have to focus only on what they need: they can also afford luxury purchases or occasional non-essential purchases.

“While it’s important to have financial stability and save for the future, being able to occasionally splurge on certain things is also a sign that you’re middle class,” Standberry said. . “It could be treating yourself to a nice dinner or going on vacation. Being able to enjoy this luxury without worrying too much about your finances is a privilege that many members of the middle class have.

You save and invest regularly

Another sign that you will retire in the middle class? You are able to constantly save money.

“This means you have enough income to cover your expenses and still have a little left to save for the future,” Standberry said. “This is important because being able to save allows you to have a safety net in case of an emergency and also to plan for your long-term financial goals, such as retirement. »

But it’s not just about saving money. Being able to invest over time through after-tax and retirement accounts is also an important sign, Kirby says.

You are not dependent on a single source of income

Another sign that you will retire comfortably in the middle class is if, during your working years, you have more than one source of income.

“This could include a pension from your job, rental income from properties you own or even passive income from investments,” Standberry said. “Having more than one source of income provides a safety net and allows for financial stability in retirement. »

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This article originally appeared on GOBankingRates.com: 10 Signs You’ll Retire Comfortably Middle Class


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