So, if you don't have a job where you can put away $6500 a year into an IRA and max out your match with a 401K are you screwed?
It's uncomfortable and nobody ever wants to hear it, and it's quick to get shouted down (especially in forums like HN where everyone is either wealthy or only "temporarily" poor), but if you can't afford to put $5500 into an IRA each year while also keeping your emergency fund topped up for 12 months' expenses while also still having enough extra for at least one little vacation that year -- then you're poor. Not middle class, but poor.
And, statistically speaking, if you're poor now, then you're likely to be poor for the rest of your life. America continues to run on the idea that that's not true, but that's a clever bit of marketing intended to keep people from realizing just how truly screwed they are.
This isn't to say that you're destitute or that it's impossible to live well at more modest means. Many people do.
Yep. Not really a laughing matter.
> Only 39% of Americans have enough savings to cover a $1,000 emergency
https://www.cnbc.com/2018/01/18/few-americans-have-enough-sa...
Relying on unemployment, disability, or having enough money (or, in most cases, credit) to "expense a hiccup or two" is not middle class. And people under 40 should have an easier time developing an emergency fund, because their expenses should be lower. People over 40 should have an easier time maintaining the emergency fund because it should be an investment account that they started before they were 30.
Your reply is a pretty good example of the amazing impact that political marketing has had on popular views towards wealth and poverty in this country. People have become entirely convinced that they aren't poor so long as they "can survive", that poverty is something that happens to the other people they hear about on the television.
$5500 a year, plus one vacation, plus building or maintaining an emergency fund, should amount to saving about $10,000 a year. The second-to-bottom, 15% tax bracket tops out at $37,950 for single people, and IRA contributions are 100% tax deductible, so you can safely gross up to $43,450 in that bracket. (edit: math.)
If it sounds difficult to squirrel away 25% gross annually in that bracket, that's because that's not the middle class bracket. It's the "poor" bracket.
However, the Fed has asked a different question intended to drill down into the same problem, and found that 47% of people responding would pay for a $400 emergency by borrowing money or selling something (https://www.theatlantic.com/magazine/archive/2016/05/my-secr..., also cites Bankrate though).
I'm unaware though of any studies finding that the majority of Americans have a significant amount of money (let's say a thousand or more) in a liquid asset of some kind. If you know of any, that would be some welcomed good news.
Second, where did you come up with this rationale that you’re poor unless X, Y, and Z?
It seems just as arbitrary to say that you’re not poor if you can put $2000 into an IRA, have a three month emergency fund, and take a week vacation.
Or let’s go the other way, why not: if you can’t put $30k per year into savings, have a three year emergency fund, and take eight weeks off per year, you’re not middle class, you’re poor.
See, we can all pull random numbers and standards out our ass!
In actuality, “poor” and “middle class” are actual defined terms with relatively well-defined meanings, none of which have anything to do with your bizarre markers of what constitutes different steps on the socioeconomic ladder.
Okay, show me a non-arbitrary definition of "poor" and "middle class". Bonus points: show me the official definition that everyone agrees on. I'll wait.
Oh, and while you're doing that, let's also pause for a moment and reflect on whether you disagree that someone that can't save $10k per year is poor, or if you were just looking for an argument on the internet.
As for definitions, here’s an official, non-arbitrary one for poverty that’s widely used. I’m sure you’ll just declare it arbitrary, which is fine, but my point is that you just came up with a random definition without anything to back it up or any reasoning as to why that’s the right threshold. Federal poverty guidelines aren’t perfect but they’re not a number out of a hat, which is what you’ve got.
No. It's not that most people can't save enough for retirement. It's just that they won't, due to a combination of bad habits and financial decisions.
People in the US are, on average, not nearly as frugal as they should be, and the sorry state of savings in this country is at least partly due to those habits. Even people with 6 figure take home salaries frequently are only a few months of savings away from financial ruin or tapping their retirement savings, if they lose their job. For them, it's a planning and discipline problem, not a problem of some evil system keeping them down.
If your portfolio allocation is incorrect, sure. But by the time people get close to retirement, most of their investments should be in bonds, which are quite insulated from the ups and downs of the stock market.
If things are in such horrible shape that the market fails to recover over any given 7-year period of time, expect shotgun shells and canned food to be the new currency anyway.
You need to watch the discussions around "entitlement reforms" that's being promoted currently. Voters can't reject candidates after the fact, who won't seek re-election after passing (or being the lightning-rod of) unpopular legislation, opting instead for cushy "jobs" in the industry they legislated in favor of against their consituents interests.