The Decline of the Middle Class: 5 Ways People Could Slip into Poverty
Recent research from the Pew Research Center has revealed a concerning trend – the middle class in the United States is shrinking. In the 1970s, about 60% of Americans fell into the middle-class category, but now, only about half of the population qualifies. The threshold for being considered middle class is a household income between $50,000 and $150,000 per year, with anything below $50,000 falling into the lower class category.
Financial experts have identified several key factors that could cause individuals to transition from the middle class to the lower class. One major issue is the lack of an emergency fund. Without a safety net of at least three to six months’ worth of expenses, unexpected events like job loss can have devastating financial consequences.
Taking on financial responsibilities for others, such as caring for a loved one, can also drain resources and lead to financial strain. Costly medical expenses, high levels of debt, and inflation are additional factors that can contribute to a downward financial spiral.
Experts recommend building passive income streams, seeking assistance for caregiving responsibilities, exploring charity care options for medical debt, and prioritizing debt repayment to avoid slipping into poverty. By staying proactive and making strategic financial decisions, individuals can safeguard their financial stability and avoid the pitfalls that could lead to a decline in economic status.