Want To Be a Twenty Percenter

Much has been written about Richard M. Reeves' book Dream Hoarders.  So I read it.

My Yahoo! feed had several articles based upon this book, which basically explains how it is the top twenty percent, rather than just the much-maligned one percent, that has been self-perpetuating their upper middle class status while shutting others out of it, essentially "hoarding" this status to their own kind.

In my own efforts to reduce my own actual hoarding, which primarily consists of books, instead of purchasing this book like I would have done a year ago, I checked it out of my local library.

When it comes to the upper middle class or the top twenty percent, I want to be a part of it.

A happy twenty percenter family.

Richard Reeves, a scholar at the Brookings Institution, a think tank whose reports I have read for many years, aims his book at the top fifth of America's richest people, its upper middle class.  Having achieved their version of the elusive American Dream, they are fighting like hell to keep it, just like you or I would upon reaching this next level of middle classiness.

Reeves' book traces the way that the upper-middle class has pulled away from the middle class and the poor on five dimensions: income and wealth, educational attainment, family structure, geography, and health and longevity.
The top twenty percent of earners might not have seen the kinds of income gains made by the top one percent and America’s billionaires, but their wage and investment increases have proven sizable.

They dominate the country’s top colleges, sequester themselves in wealthy neighborhoods with excellent public schools and public services, and enjoy healthy bodies and long lives.

I should mention that both of my younger siblings are in this upper fifth in wealth, income and educational attainment, as is my mother although she has little to no income currently besides residual income from my late father, who passed away six years ago this past August.

I do not begrudge either sibling their upper middle class status - quite the opposite.  My brother makes far more than the minimum amount required by any measurement of the status as a self-employed attorney who now employs others including paralegals and administrative assistants at two offices.  Actually, earning in the neighborhood of a quarter mil per these years, my brother is more like in the top five percent.  Our sister and her husband combine their full-time salaries to attain the top twenty percent status, but not by very much.

Many of the people whom I work with are above the twenty percent mark. Some of them far above, with combined incomes over $200,000.  In one department head's case, he and his wife combine to earn closer to $250,000, with his own salary just under $150,000 and his wife a professor at a state university who also runs a successful consulting business.

I have an uncle whose household has far surpassed this status, but he and my aunt would be reluctant to declare themselves rich.  My uncle earned a high income for several decades as a financial executive for a software firm and is the wealthiest person who I am close with, although my younger brother may be surpassing him any year now.

I do not begrudge them their wealth at all, either, since my uncle worked sixty to seventy hour weeks for decades, overseeing financial matters and taxes of a growing company and ultimately making enough to retire by working for two years on the acquisition of his firm by a very well-known publicly traded company; however, the details are too private for me to share here.

I know that a wide chasm exists between the top 20% of wealthiest households and those in the lower 80%.  As Reeves' book and the subsequent articles about it attest to, this makes a mockery of America's vision of itself as a land of opportunity.  Those born in the upper middle class have a leg up and great chance to grow up to be in the same.

Many of the mechanisms by which this class defends itself are sources of a sense of preciousness, like the ability to send their children to something better than the local state college, to send them to private schools rather than public growing up, to live in better neighborhoods, to eat better food, to take private lessons and so on and so forth.

My wife and I strive to do much of these same things for our own two children, with the difference between us and the upper twenty percent being that it puts a great strain on our resources to the point where we continue to drive beater cars, still own two tube TVs, use pay-as-we-go phones, do not contribute enough to our retirement accounts and rarely take good vacations.

So How Far Are We?

In my own middle class case, I was wondering what level of income one must attain before being considered part of the top twenty percent.

As is the case with many things, it varies somewhat depending upon what source you go to. With my wife and my combined income projected to be about $120,000 this year, that is the number that I used.

I checked four of the top sites that came up when I Googled the term "top twenty percent income."

Per DQYDJ.com's household income percentile calculator, our family only half a tick away from cracking into the top twenty percent.

Per statisticalatlas.com, my family has already reached this coveted percentile by exceeding $111,900, but I do not buy into it.  I do not know when this was last updated, but suspect that it has been a while.

I have subscribed to and read Kiplinger's Personal Finance for over twenty years, so it makes sense that I would check its calculator regarding household income.  Kiplinger's did not give an exact or even near exact measurement, telling me that we have made it into the top 25% of earners in the country, which I had already assumed based upon the DQYDJ.com website.

Are you in the top 25% of all earners? The top 10%? Plus, find out what portion of the tax burden you bear according to your income status.

Your $120,000 adjusted gross income (AGI) puts you in the top 25% of earners.  The top-earning 25% of taxpayers reported 68.9% of all AGI and paid 86.8% of total federal income taxes.

The Pew Research Center is a very well-respected institution, and another fount of information whose reports I read on a continual basis.  In a detailed report on income tiers in the U.S. dating from May of 2016 and utilizing data from 2014 on income percentiles per socioeconomic class, Pew defined the upper quintile as those with incomes of $125,000, which seems like the real magic number to me.

$125,000 is well within reach.

It seems like the magic number because it is just out of reach for us.  With what I expect to make this year and next, plus my wife's small amount of income from her school lunch time job, plus a few thousand in dividends at the end of the year, plus another thousand or so in eBook sales, we should crack the $120,000 threshold this year, perhaps $125,000 in 2019, but still be about ten thousand shy of making the top twenty.

I do plan on self-publishing some eBooks, but I doubt that they will earn me the $10,000 or so that we would need to make it to the next echelon.

What is fun to think and dream about is increasing my thousand or so per year in eBook sales to ten, twenty or fifty times that amount.  Consider that one of my "Some Day/Maybe" goals, but it remains a goal nonetheless.

I have also been researching how to start an e-Commerce business and am inching closer to doing so.  I am fairly meticulous as you may surmise by reading some posts, but I also tend to over-think things rather than doing them, so I have to take some action on this soon or I never will.

Some day soon, I will write a post about how our household cracked the top twenty percent for the year.  I know in my heart that that day will come, just as I know that it will feel precarious as hell and could be lost on a whim by my new boss or some other setback.

The thing is to create an income stream or multiple income streams that apply to you whether you continue working for that local government agency like I do, the business that employs you or the school that you teach for.  If you rely on gigs to make a living, that could dry up too.  There are millions of people out there looking to replace what we do with technology or outsource what we do to low-paid foreign workers.  When you reach my age in local government work, there is a bevy of young employees just chomping at the bit to take your job from you.

I am not a mensch who hustles from gig to gig, but I am a mensch who needs to make some extra money just as much, if not more, than many folks.  Our long-deferred needed home repairs are really catching up to us this month and I really need to invest in our home this coming spring, if not sooner.

I do not harbor any illusions of cracking into the one percent, but twenty percent?  Here I come.