“Middle class” feels more confusing than ever. Here’s how you can avoid being caught in the middle

Marcos Cabello, a writer at Bankrate, makes around $170,000 a year when combining finances with his fiancee. Unfortunately, that doesn’t go as far as he’d like in pricey Boston. 

Cabello and his fiancee consider themselves middle class, but in a city where homes are typically over $1 million, traditional middle-class benchmarks, like homeownership and taking yearly vacations, are still distant goals. That’s not only true in Boston. Cabello and other families across the country may bring in high incomes, yet they still haven’t been able to achieve a “middle-class lifestyle.” 

“I just feel behind, (compared to) my parents. I actually turn 30 in a couple of weeks, and this is coincidentally something that’s been on my mind. There’s no way I’m ready for a house until at least close to mid-30s unless I can get help for a down payment from someone or somewhere,” Cabello says.

In today’s rapidly changing economy, “middle class” doesn’t mean what it used to mean only a few decades ago. Although a middle-income salary can feel like it should be enough to live comfortably, many Americans making an average income are still struggling to afford a home, save or pay for discretionary purchases. With those goals out of reach, many Americans feel locked out of the middle class completely.

Middle income versus middle class

Part of the confusion is that “middle class” is different from “middle income.” The Pew Research Center defines “middle income” as a household that makes two-thirds to double the national median income after adjusting for household size. That works out to $56,600 to $169,800 annually for a family of three in 2022 dollars, the latest data available. 

Conversely, “middle class” is closer to a lifestyle label, although the two are often used interchangeably. Although it varies from person to person, generally, the term “middle class” brings to mind a family who owns a home, doesn’t live paycheck-to-paycheck, has enough money for discretionary spending and is able to save for the future. 

This is where it gets confusing — that rosy picture isn’t the reality for many middle-income people today. 

Over the last year, Bankrate’s surveys of Americans have found that, while middle-income earners are typically more financially comfortable than lower-income people, many still don’t meet those traditional middle-class benchmarks. A sizeable percentage of Americans who make between $50,000 and $79,999 per year can’t afford a house, live paycheck-to-paycheck or can’t afford a summer vacation:

• 42 percent of people who don’t own a home and make between $50,000 and $79,999 annually say they don’t have enough income to afford a house, according to Bankrate’s Home Affordability Survey.  
• 33 percent of Americans earning between $50,000 and $79,999 annually live paycheck-to-paycheck, according to Bankrate’s Paycheck to Paycheck Survey. A similar percentage (36 percent) of those making between $80,000 and $99,999 say the same. 

• 60 percent of people who skipped a summer vacation in 2024 and made between $50,000 and $79,999 said they couldn’t afford one, according to Bankrate’s Summer Vacation Survey. 

“(Middle class) is often equated with this idea that you’re financially comfortable,” says Megan Doherty Bea, an assistant professor of consumer science at the University of Wisconsin-Madison. “Increasingly, more and more families do not feel financially comfortable.”

A person making $70,000 per year today might be middle income, Bea says, but they might also have high debt, like credit card debt and student loans, which makes homeownership and other significant goals even more out of reach. 

“That, I think, is part of the disconnect with the middle class,” she says. “Technically, yes, you are middle income, but the ability to be middle income and have the stability that maybe your parents or grandparents had is much harder to find.”

Compared to a few decades ago, fewer Americans are middle income today

The percentage of American households who are middle income has fallen between 1971 and 2022, according to the Pew Research Center. Richard Fry, a senior researcher at Pew, says that since 1971, more Americans are either lower income or upper income, and fewer are middle income. It’s part of a phenomenon better known as the “vanishing middle.”

Bea and Fry attribute the vanishing middle to several factors: 

Low wages and inflation

The federal minimum wage is $7.25 and hasn’t risen since 2009. In the meantime, high wages haven’t fully caught up to post-pandemic inflation. In other words, families today have less buying power than they did only a few years ago. While wages are on pace to recover from inflation in the second quarter of 2025, that doesn’t change the fact that the past few years of inflation have taken a severe hit to Americans’ finances.

As inflation rises, Americans’ definition of a reasonable salary has changed. Decades ago, a middle-income salary may have felt like enough to live a “middle-class lifestyle.” Today, Americans say that they’d need to make over $186,000 per year on average to feel financially secure or comfortable, according to Bankrate’s Financial Freedom Survey.

“Most people’s knee-jerk reaction when they hear that number is to call it unrealistic or superfluous, but they often change their tune when they hear it put into historic context. A salary of $186,000, for example, had the same buying power as $62,046 in 1984,” Bankrate U.S. Economy Reporter Sarah Foster says. 

Automation

Since the 1980s, the rise of automation and new technology in the workplace has replaced many middle-income jobs, such as manufacturing and bookkeeping, according to Fry. More jobs today are either lower-wage service jobs that don’t require a degree or higher-paying professional and managerial roles that do require one. That locks certain workers, especially workers without a college degree, out of roles that could have paid them a middle-income salary. 

“What we see is two divergent tales: good outcomes for college-educated workers, declining outcomes for non-college-educated workers,” Fry says. “Essentially, the middle of the labor market is hollowed out.” 

As a result, the number of middle-income workers has fallen over time. In 1971, 69 percent of people with only a high school diploma were middle income, according to Pew. That fell to 52 percent in 2021, the biggest drop of any education level.

Rising debt

Between the first quarter of 2004 and the third quarter of 2024, Americans’ non-housing debt swelled from $2.12 trillion to $4.96 trillion, according to Equifax’s FRBNY Consumer Credit Panel. Bea also points out that more purchases today, from new cars to new TVs, are financed. With so many Americans’ incomes swallowed up by debt repayment, they’re increasingly unable to meet middle-class benchmarks. 

How you can avoid being squeezed out of the middle

It’s tough out there for middle-income Americans. Broadly, Bea says that a higher federal minimum wage, increased social safety nets, reduced college tuitions and incentives for vocational schools could all help middle-income individuals and families get ahead. But those would be federal programs, and it could take a long time for many of them to be implemented nationwide. In the meantime, you can improve your financial position by increasing your income, paying off debt, increasing your savings and other methods. If your goal is to get closer to a middle-class lifestyle, there are a few things you can do today:

1. Increase your income 

One of the most effective ways to afford a “middle-class lifestyle” may simply be increasing your income. If changing jobs or snagging a raise aren’t options right now, consider looking for new streams of income, such as through freelancing and gig work or through passive income. Starting a freelance business today might not see rewards immediately, but it can be a huge step towards financial comfort later on down the line. 

2. Look for ways to boost your education

A college degree can unlock more earning potential, but if you’re unable to pursue a new degree right now, consider any number of lower-cost alternatives to college. Trade programs, apprenticeships or bootcamps can often lead to new work opportunities, without the time commitment or cost of a four-year degree. 

Also, 24 states have at least one community college that offers a four-year program, typically in high-demand fields like engineering, nursing or cybersecurity. Not only do these programs tend to be more flexible for students working full-time, but they’re offered at a fraction of the cost of four-year universities. 

3. Prioritize paying off debt

Even if you take home a middle-income salary, it can be hard to live the lifestyle you want if your income is being swallowed up by debt repayments. To start tackling that debt, first sit down and figure out how much you owe. For each debt, make sure to write down the loan interest rate, the minimum monthly payment and the payment due dates. 

Then, consider how you’ll pay off those debts:

• Debt snowball method. This debt payoff method helps by focusing on your account with the smallest outstanding balance first. Pay that balance off, then move on to the account with the next smallest balance and so on. This gives you the motivation to continue paying off your debts — just make sure you’re paying the minimum on your other debts, too.
• Debt avalanche method. The debt avalanche puts your focus on your account with the highest interest rate. Once that account is paid off, move on to the account with the next highest interest rate. Like the debt snowball method, continue paying the minimum on your other accounts. This method lets you pay less over time, since you’re prioritizing your debts with the highest interest rates.
• Debt consolidation. A balance transfer credit card or debt consolidation loan are two ways you can consolidate your debt onto one account, often with a lower interest rate. A balance transfer credit cards often offers a 0 percent interest rate for a fixed period of time, usually 15 or 18 months. This is especially handy for high-interest credit card debt. 

4. Save smarter, not harder

A high-yield savings account pays higher interest rates on your savings than a standard savings account — accounts can offer as high as 4.75 percent APY, as of December 2024. Taking advantage of a savings account with a higher interest rate can earn you more money on your savings than you would receive normally, and can make meeting your savings goals a little easier. Less than 5 percent APY may not seem like much now, but small savings can build quickly over time.

Also, consider “slow shopping”

If overspending is keeping you from meeting your savings goals, consider re-examining your approach to spending.

Learn more

5. Look into housing affordability programs

Owning a home is a key factor in what many people consider a middle-class lifestyle, but it’s not always easy to save enough for a 20 percent downpayment. First-time homebuying programs can help. If your household is considered lower-income (generally considered to be 50 percent of your city’s medium income) you may be eligible for a housing voucher for first-time homebuyers, which are typically managed through your city’s housing authority. The Federal Housing Administration also offers loans geared towards first-time homebuyers and other households in need. These offer lower down payments, lower closing costs and easier credit limits than traditional loans.