The early-1970s middle-class lifestyle is now impossible to achieve for most people
Recall my economic analysis from last October, titled The new world order and how it destroyed the middle-class lifestyle. In that analysis, I estimated how much a household needed to be worth in 2021 dollars in order to enjoy the typical 1971 middle-class lifestyle.
I determined that last year’s average household with children needed at least $1 million in balance sheet wealth to enjoy the typical middle-class lifestyle of the early 1970s. Read further to find out what the updated value has become.
You may think that $1 million is excessive, so let’s consider the dynamics of the early 1970s middle-class household and the benefits they took for granted;
- A single wage earner was usually enough to cover all expenses
- These families could afford to have more than a couple children
- Medical costs were much more reasonable and health insurance was less expensive
- College tuition was much more affordable, and were not subsidized with student loans
- Social Security benefits were much higher in real spending power
- Employers usually provided defined benefit plans and pensions for employee retirement
- House prices were much lower when compared to household incomes.
In 2010, house prices were 2.68x median household income. As of the beginning of 2022, this number is close to about 4x, and should be higher now. In 1970, this number was about 2.00-2.05x.
The alt-media have been demoralized to think there is going to be some sort of reversion to the mean, but they are totally unable or unwilling to recognize the multi-decade secular changes to trends that have essentially collapsed the lives of the poorest 90% of the population. The US dollar has been spread far and wide, and about 80% of them have been exported to foreign lands to hide the obvious. Those who cannot come to terms with this sobering reality will always end up on the wrong end.
I now calculate the 1971 middle-class lifestyle for 2022 to be worth about $1.11 million, and based on current trends, this year-end value should be about $1.18 million.
If you wish to enjoy the middle-class lifestyle of 1971, be prepared to have a balance sheet of about $1.2 million by the end of the year.
- This strong balance sheet will allow you to sustain your household with one wage, so your wife doesn’t have to work,
- It will allow your wife to stay at home to take care of your three children,
- This amount will provide you with a financial cushion to pay the mortgage on your house,
- You should expect to have defined contribution assets at least $550,000 by 45 years of age, which will offset the loss of purchasing power to your future SS benefits and loss of defined benefit plans,
- Your savings will allow your children to attend college without the help of student loans, since few people back 50 years ago resorted to educational loans as financing schemes,
- You can afford any medical expenses as healthcare costs were only a fraction of what they are today.
Why wait for society to collapse? It has been for a long time now and only those waiting for the collapse to happen have not been notified.