More people think they are part of the middle class than actually are, according to Northwestern Mutual.
According to Northwestern Mutual’s 2017 Planning and Progress Study, 70 percent of American adults consider themselves middle class. But the Pew Research Center analyzed government data and found the number of people in the middle class was only 61 percent in 1971 and dropped to 50 percent in 2015.
In 2014, middle class was defined as having an annual household income of $42,000 to $125,000 for a three-person household, according to the Pew Research Center.
The key to the discrepancy may lie in the way Americans perceive what it means to be part of the middle class. According to the Northwestern Mutual study, 70 percent of Americans feel lifestyle and perspective are defining elements of the middle class, as well as income.
The middle class in America stands out from the population as a whole because members have greater near- and long-term economic optimism, and strong financial habits, the Northwestern Mutual study says. They are more likely to believe the American dream is attainable and they are more optimistic about the U.S. economy this year compared to 2016.
They also are more likely to work with a financial advisor (43 percent) than the general population (35 percent), more likely to feel financially secure (58 percent versus 47 percent) and more likely to have a retirement plan designed to withstand market cycles (51 percent versus 43 percent).