The middle class is typically defined as a group of people with relatively stable incomes, professional knowledge, good education, and a pursuit of higher quality of life. However, as people age, the concept of the “middle class” starts to shift, especially when they reach their seventies, where income sources often switch from wages to pensions, savings, and social security benefits.
Want to know if you can still belong to the middle class after the age of 70? How much money should you save for retirement to qualify?
According to data from retirement planning provider Fidelity Investments, individuals should save 10 times their annual income before the age of 67 to enjoy a comfortable retirement.
“When you reach your seventies, the definition of the ‘middle class’ is not just about how much monthly income you have, but also whether your overall financial situation allows you to live comfortably without worrying about running out of funds,” said Kevin Marshall, a Certified Public Accountant (CPA), tax and personal finance expert, and a senior author of the Amortization Calculator, to Gobankingrate website.
So let’s take a look at the minimum net worth required for a seventy-year-old to be considered part of the “middle class.”
According to analysis by Kevin Huffman, the owner of Kriminil Trading, by 2025, the funds needed for a seventy-year-old to maintain a middle-class lifestyle will vary significantly based on location, healthcare costs, and the lifestyle one desires.
However, he roughly estimates that for most retirees, a net worth of around $500,000 to $1.5 million is generally needed to be part of the middle class.
Huffman pointed out that in moderate cost-of-living cities like Denver, people may need about $750,000 to cover basic living expenses: health insurance ($7,000 annually), groceries, utilities, and occasional outings. For those residing in high-cost areas like San Francisco, living expenses are even higher, potentially requiring $1.2 million or more.
“A typical retired couple in their seventies needs at least $55,000 to $65,000 annually, not including long-term care costs,” added Huffman.
Huffman claims that a seventy-year-old with $300,000 in savings after paying off a mortgage and an annual income of $40,000 from social security/pensions can generally maintain a middle-class lifestyle without too much strain.
He explains that the key is to maintain sufficient liquid financial assets, staying in the seven-digit range, while ensuring stable income sources enough to outpace inflation.
Through prudent planning, such as downsizing housing or converting some savings into annuities, individuals can make the most of their net assets.
(Note: This article represents the author’s views and opinions, serving only as general information reference without any intention of recommendation or solicitation. The Epoch Times does not provide advice on investment, tax, legal, financial planning, real estate planning, or other personal finance matters. The Epoch Times does not guarantee the accuracy or timeliness of the article’s content.)