4 ms·

> Lol, by that measure 80%+ of the US is poor. Yep. Not really a laughing matter. > Only 39% of Americans have enough savings to cover a $1,000 emergency htt

> Lol, by that measure 80%+ of the US is poor. 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-savings-to-cover-a-1000-emergency.html 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.

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taurath 9y ago
That source is absolutely wrong though - it originated from a report from Bankrate which only counted money in people’s savings (not checking) accounts. With rates under 1% for the past decade many people haven’t been even using a savings account.
- thaumaturgy 9y ago
  That's a fair criticism. The Bankrate report was marketing material, based on a survey, and someone's answer would depend on what they considered a "savings account" to be. I don't have a savings account with my bank because, as you say, it's not worth it. I do have a small amount of savings in an investment account. Whether I'd consider that when asked about a savings account or not, I dunno. 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-secret-shame/476415/ 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.
ryanwaggoner 9y ago
First, your tax ignores payroll tax, and IRA contributions are pre-income-tax but post-payroll-tax. Just FYI. So taxes take a bigger bite than you’re portraying. 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.
- thaumaturgy 9y ago
  IRA contributions for most people are above-the-line 1040 deductions, i.e., they count as a direct adjustment to your income regardless of how the rest of your taxes are structured (with exceptions for people who have employer IRA plans available or are self-employed or half a dozen other conditions, I am not a tax adviser, etc. etc.). 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.
  - taurath 9y ago
    You’re the one creating your own definitions and making assertions, accusing someone else of just looking for an argument seems disingenuous.
  - ryanwaggoner 9y ago
    IRA contributions are subject to FICA taxes, as are employee contributions to 401k, etc. FICA taxes withheld from your paycheck regardless of your contributions, and there’s no credit to give some of it back to you on the 1040 because you made an IRA contribution. 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. https://aspe.hhs.gov/poverty-guidelines https://aspe.hhs.gov/poverty-guidelines

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taurath 9y ago

That source is absolutely wrong though - it originated from a report from Bankrate which only counted money in people’s savings (not checking) accounts. With rates under 1% for the past decade many people haven’t been even using a savings account.

thaumaturgy 9y ago
That's a fair criticism. The Bankrate report was marketing material, based on a survey, and someone's answer would depend on what they considered a "savings account" to be. I don't have a savings account with my bank because, as you say, it's not worth it. I do have a small amount of savings in an investment account. Whether I'd consider that when asked about a savings account or not, I dunno. 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-secret-shame/476415/ 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.

ryanwaggoner 9y ago

First, your tax ignores payroll tax, and IRA contributions are pre-income-tax but post-payroll-tax. Just FYI. So taxes take a bigger bite than you’re portraying. 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.

thaumaturgy 9y ago
IRA contributions for most people are above-the-line 1040 deductions, i.e., they count as a direct adjustment to your income regardless of how the rest of your taxes are structured (with exceptions for people who have employer IRA plans available or are self-employed or half a dozen other conditions, I am not a tax adviser, etc. etc.). 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.
- taurath 9y ago
  You’re the one creating your own definitions and making assertions, accusing someone else of just looking for an argument seems disingenuous.
- ryanwaggoner 9y ago
  IRA contributions are subject to FICA taxes, as are employee contributions to 401k, etc. FICA taxes withheld from your paycheck regardless of your contributions, and there’s no credit to give some of it back to you on the 1040 because you made an IRA contribution. 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. https://aspe.hhs.gov/poverty-guidelines https://aspe.hhs.gov/poverty-guidelines