How Much Money Does the Middle Class Really Need to Get By?

Money being counted

Americans need much more than we think to simply get by. | Juan Barreto/AFP/Getty Images

According to a recent Gallup survey, most American families believe a family of four would need at least $58,000 per year to “get by” in their communities. That’s more than the median household income, which came in at $55,775 a year in 2015. And it’s more than double the 2015 federal poverty threshold of $24,036 for a family with two adults and two children.

Clearly, there’s a pretty big disparity between what government officials consider a “living wage” and what American families consider a living wage.

According to MIT, the living wage varies depending on which region of the United States you live in. “Families of four (with two working adults, two children) in the North ($69,273), and West ($68,651) have higher median living wages before taxes than the South ($63,837), and Midwest ($63,144),” according to MIT’s living wage report.

Yet, even the living wage as dictated by MIT is just that: a wage you can survive on. So how do you know when you’re finally earning a comfortable living? And how do those numbers change as you go through life?

Let’s take a closer look at how much money the middle class really need to get by these days.

How do you calculate that magic number?

woman hand putting coin into piggy bank

There’s no one magic number. |

An obvious difficulty with tackling financial questions regarding income is the “magic number” is going to be different for everyone. It depends so much upon lifestyle and priorities, which will vary from one person to the next. One way you can get an accurate idea of your own ideal income level is by utilizing an online tool, such as this one by LearnVest, which helps you determine about how much money you would need to live your ideal lifestyle.

We looked at various expenses, based on nationwide averages, to determine what a “comfortable” income level amounts to. That includes home prices, child care, and retirement costs. We used MIT’s Living Wage calculator for a base income. To make things simpler, we used Maryland’s living wage figures, which happen to fall within the most expensive region of the U.S.: the Northeast.

First, we’ll take a look at the recent college graduate or young professional, and then move on to other demographics.

The recent college graduate

young man walking outside with a backpack over one shoulder

College graduates face student loan hardships and other expenses on entry-level salaries. |

Recent college graduates face their own, unique set of challenges. Young professionals are busy adjusting to the job market. And often they have just started in their chosen field. Plus, they might have a mountain of student loan debt.

Although young professionals are likely making less than their senior counterparts, they also have fewer expenses. They’re less likely to be sharing income with a spouse. And many are living on their own or sharing an apartment with roommates. For most young professionals, buying a house isn’t high on the to-do list. In other words, young professionals are likely to have fewer expenses than a young family.

Thus, recent college graduates in their 20s are in a great place to start saving. And though it might sound mundane — and be difficult to balance student loan debt with longer-term financial goals — experts say it’s worth the effort. Investopedia notes saving early can mean the difference between thousands and millions in the bank. And “when you start early, you can afford to put away less money a month since compound interest is on your side.”

So what you would need to live “comfortably” as a recent college graduate in most parts of the U.S.? According to MIT’s Living Wage calculator, a single adult in Maryland needs to make about $13.84 an hour to “get by.” Then, factor in a 20% to 30% buffer to allow for savings, spontaneity, and extra debt.

The young couple

middle class couple looking over papers

Middle class couples are often saving for large expenses, such as homes and children. |

Young couples can potentially save on rent and groceries compared with recent college graduates because they’re able to split their bills. In general, each party should be able to make a little less and still maintain relatively the same lifestyle as before they partnered up.

That being said, many young couples are starting to look toward broader, long-term financial goals, such as saving for a house, retirement, or a family. As a result, while theoretically you might be able to make less and still live comfortably with your partner, making smart long-term financial decisions means added income is necessary.

According to MIT’s Living Wage calculator, two adults in Maryland need to bring in $10.55 an hour to make a living wage. But if you’re hoping to buy a house or start financing other long-term goals, you’ll need to bring in even more income. CNN Money cautions that your total debt payments (such as mortgages, car payments, student loans, etc.) shouldn’t exceed 36% of your gross income, so it’s important to run the numbers to be sure of what you can truly afford.

Financial Samurai notes with an income of $50,000 a year, after you contribute the maximum to your 401(k) you’re left with just $28,000 in gross income, which amounts to about $24,000 after taxes — not nearly as much as it might sound like after expenses, including rent, transportation costs, and groceries.

The small family (1 to 2 kids)

parents with young child

Working families must make a lot more than average to fund their children’s college tuition. |

Things suddenly become more difficult (and more expensive) if you decide to have kids. Young families certainly have more expenses, and it shows in the numbers.

MIT suggests families with one to two children would need to make between $15.69 and $29.30 per hour, depending on whether one or both of the adults are working. And that number should increase based on our 30% buffer for unexpected or big-ticket expenses. Plus, child care can run you hundreds or thousands a year, depending on where you live. Private school? Let’s not even go there.

In the end, in order to be comfortable as a small family and still have adequate money for savings — retirement and college being the big-ticket items — it’s likely you’ll need a lot more than the living wage.

The couple approaching retirement

older couple golfing

Couples preparing for retirement must learn to live on a tight budget. |

Like recent college graduates, people nearing retirement have a very unique set of challenges ahead of them. While young professionals are often learning to acclimate to the work force, those nearing retirement must do the opposite: plan for their transition away from the working world.

Unfortunately for those looking to retire, most of the work of saving for retirement has already (hopefully) been done. As an older couple, many of your largest expenses have already been accounted for. You’ve bought a house, paid it off, sent the kids to college, and saved as much as you can for retirement. How much could you possibly need?

Assuming a couple has already paid off their mortgage and owns their house, income requirements will be slightly less than they were as a young couple or family. Yet, as recent reports note, most Americans aren’t ready for retirement. It’s important to maintain a similar income and save as much as you can. Remember, most Americans aim to earn about 75% to 85% of their pre-retirement income during retirement.

CNN Money offers a retirement calculator to help you discern how much you need to save before you actually wave goodbye to the 9-to-5 grind. Chances are you’ll need to maintain the same income you had as the head of a young family to adequately save.

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