Is Millionaire Status the New Middle Class?

Grant Cardone Thinks So. What is Middle Class Anyway?

A recent article on CNBC caught my attention.  Grant Cardone, a successful entrepreneur with a loyal following, described achieving Millionaire status as the new middle class.  I thought that was a bold assertion.  But after doing some research I believe that Mr. Cardone may actually be right in some cases.

What is Middle Class Anyway?

Spend even a small amount of time researching what the definition of middle class is and you will soon realize that the answer to that question is not so simple.  The middle class is usually defined by a range of total household income.  The Pew Research Center (PEW) considers middle-class Americans as those living in a three person household with combined total incomes of $41,900 to $125,600 per year.  This is about two-thirds to two times the U.S. median income ($56,516 in 2015).

You may commonly hear the middle class broadly described as anyone meeting this threshold of income.  However, one of the key parts of that range is the household size.  The below chart from PEW research shows the breakout of income levels needed by household size to be considered ‘upper income’ and ‘middle income.’


Household Income Levels


Based on Income Alone is Mr. Cardone Correct?

Well, maybe, maybe not.  1) If you had $1,000,000 invested in a mix of stocks and bonds and 2) if we follow the 4% rule – meaning you use an annual withdrawal rate of 4%, which is a commonly accepted (and highly-debated) practice – your income of $40,000 would place you just below the middle class.

That presumes you are using the ‘$41,900 to $125,600 per year for a three-person household’ bracket.   I don’t believe Mr. Cardone was using the 4% rule when he stated, “Oh, I’ve got about four or five years of money,” when referring to what it’s like having one million dollars.  Clearly he’s using a much higher withdrawal rate.

The PEW article offers up a calculator that can be used to determine what class one falls into.  When you input a three-person household living in Waco, TX, making $40,000 a year, it defines you as the middle income tier along with 54% of other adults in Waco.  So, with $1,000,000 dollars invested, using a 4% withdrawal rate and living in Waco, TX, you are middle class.  Put those same numbers into Stamford, CT, and you are considered in the lower income tier.  So location matters.

Are You in the Middle Class Calculator

How Far Can You Make It Go?

Plenty of people would be thrilled to have 1 million dollars giving them $40,000 a year in income.  But I think it is fair to say, for the average person, having a million dollars will not produce that lavish lifestyle that many often mistake with the word “millionaire.”  At least not for very long.

Note that I said ‘average.’

There is a rising trend – a community of FIRE (Financial Independence Retire Early) folks who are saving like crazy, cutting their expenses to an extreme, and learning to get by with less so that they can retire early.  I suspect many within that community would take me up on the offer of being able to live a lavish lifestyle on $40,000 a year.  More power to them!

If you are not familiar with some of these folks, check out the below blogs.  There are so many great ones to choose from!

Think Save Retire

Our Next Life

Mustard Seed Money

Looking Past the Dollars

Beyond the income levels, what defines the middle class is often based on certain activities viewed as ‘Middle Class.’ This graph shows the activities and results of a PEW survey.  The one activity that stands out to me is: “ability to save money.”  One other quick point to highlight – “a college education” is not a strong indicator of being middle class in this survey.


Top Requirements to be middle class

If you had a million dollars, assuming you didn’t win it or inherit it, you probably saved it.  This would be a strong indicator that you are in the middle-class range since you are engaging in saving money.  But the ability to save money comes down to more than just income.

Lifestyle choices and spending habits play a big factor.  There are plenty of people who meet the required income level to be considered middle or upper middle class but live a lifestyle well beyond their means.  If you live beyond or right up to your means, it is unlikely that you would ever be able to save a million dollars.  Not being able to save money would be keeping you from a commonly-viewed middle class activity.


Going back to Mr. Cardone.  What does all this mean?

  1. While Mr. Cardone’s comments may come off as a little arrogant or harsh to some, in a lot of cases he is right.
  2. While your income may tell you that you are within a certain income class, it does not tell the whole story in regards to cost of living, lifestyle, and overall financial security often associated with being middle class.
  3. Your ability to save money is a strong indicator of being middle class, which is one of the surefire ways to become a millionaire.

I do like some of the overall sentiments of Mr. Cardon’s comments on wealth.

“It’s about help, because all of a sudden you realize, wow I can help my church, I can help the local school, and I can help my kids more.  I say, go get rich, go help a bunch of people, and when you get rich, go get richer.”

Please note: I reserve the right to delete comments that are offensive or off-topic.

8 thoughts on “Is Millionaire Status the New Middle Class?

  1. Building up that nest egg is important to add another income stream along with the day job. That’s been my approach as I pursue FIRE. And to that point I agree with Cardone, a million may be the baseline. My goal is $3 million and I’m a third of the way there.

  2. Interesting thoughts. You definitely think ‘rolling in wealth’ when you hear ‘million dollars,’ but that assumption is often far from the truth.

    • i agree. I read somewhere that what people often associate with being a millionaire is somewhere in the range of about $20M. Like, private jets, trips to vegas, and lobster every night kind of stuff.

  3. I have thought a lot about the use of the term “middle class” in the political context. It seems like politicians use “middle class” to refer to anyone who is not homeless and is not in the 1%.

    It is interesting to think about middle class in terms of accumulated wealth rather than in terms of income. I think I’ve only ever heard of it discussed in terms of income, but that doesn’t really do it justice when you think about the middle class having a level of stability that the poor do not have. Definitely an interesting conversation.

    • Thanks Matt. I actually had a really good time writing that article and going through all the data. I agree completely that the term middle class is a term politicians use at their leisure. A person could accumulate a lot of wealth and technically be completely poor in the eyes of the Govt depending upon where their money is.

  4. I definitely agree that being a millionaire does not make you rich. Let’s say you retire at 40. You’d probably need $5 million just to live a comfortable and luxurious lifestyle. That doesn’t factor in inflation, which will decimate the value of your savings. I guess being a billionaire is the new millionaire.

    • somehow saying someone is a ‘deca-millionaire’ doesn’t have the same ring to it as just saying millionaire, but that’s probably what people really mean when they say it. thanks for checking out the post.

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