The Middle Class is Disappearing…Because They’re Moving Up

Yes, the “middle-class is disappearing” as we hear all the time, but it’s because middle-income households in the US are gradually moving up to higher income groups, and not down into lower-income groups. In 1967, only 9% of US households (only 1 in 11) earned $100,000 or more (in 2017 dollars). In 2017, more than 1 in 4 US households (29.2%) were in that high-income category, a new record high. In other words, over the last half-century, the share of US households earning incomes of $100,000 or more (in 2017 dollars) has more than tripled! At the same time, the share of middle-income households earning $35,000 to $100,000 (in 2017 dollars) has decreased over time, from more than half of US households in 1967 (53.8%) to less than half (only 41.3%) in 2017. Likewise, the share of low-income households earning $35,000 or less (in 2017 dollars) has decreased from more than one-third of households in 1967 (37.2%) to below one-third of US households last year (29.5%), a near-record low.

Mark J. Perry, “America’s middle class is disappearing … but it’s because they’re moving up.”, July 30, 2019, Emphasis in the original.

The Death of Equities

August 13th marked the 40th anniversary of BusinessWeek’s famous cover and cover story, “The Death of Equities: How Inflation is Destroying the Stock Market”.

At the time of that writing, the S&P 500 closed at 107.42.

Today, as I write, the S&P 500 is north of 2,900.

The fuel of financial journalism is negativity. The same tired crap is being written today. Really, don’t read or listen to it. It can only cause you to underperform. Read something happy … and factual.

The Power of HSAs

Health Savings Accounts (HSAs) are powerful savings vehicles.  

HSAs are triple tax free:

  1. Contributions are tax-deductible
  2. The account grows tax free
  3. Withdrawals are tax free if used for medical expenses

One of the best uses of an HSA is to save up for the enormous medical expenses we will experience in retirement.

To be eligible, you have to have a high-deductible health insurance plan, which many, if not most, of us have.

This is a powerful addition to your retirement savings. If your health plan is HSA eligible, open one. I use Further at Low fees, more than enough investment choices.

The Latest Apocalypse

In response to Monday’s sizable market downturn, on top of last week’s stink up, I submit the following, courtesy of Scott Grannis’ Friday June 21st submission:

  •    Household debt is at historically low levels
  •    U.S. Household net worth has reached an all-time high, due to increased savings and investments
  •    Per Capita net worth is at an all-time high

Please don’t get twisted about the current state of affairs or the market’s short term reaction to them. Keep your long term financial plan on track, leave it just the way it is.

Kids Over 18

An interesting idea from one of our clients:

Kids over 18, legal adults, need a Will, a Durable Power of Attorney and a Living Will so you, as parents or close relatives, can act on their behalf if the unthinkable occurs.

As ugly as this is, the pain of something happening doesn’t need to be magnified by having to hassle with existing laws.

IRS Telephone Scams Continue

The IRS warns that IRS phone scams are surging, with caller IDs being altered to read, ‘IRS’ or ‘Taxpayer Advocate Services’.

Victims are told they owe taxes and must pay through a wire transfer, gift card or prepaid debit card, which is ridiculous when you think about it. The scammers are threatening arrest, foreclosure or deportation. Seniors and low-incomers are especially targeted. Please be aware. If you get one of these calls, just hang up.


Heard a great quote from one of the speakers at The Investment Center’s Educational Conference in New Orleans that Maria and I attended.

“Gambling odds are less than 50%. The longer you’re in, the greater your chances of failure. The market goes up 75% of the time. The longer you’re in, the greater your chances of success.”

Accept Uncertainty

In the world of investing, the future is unknowable. ‘Uncertain’ is simply the way it is. How much uncertainty you can handle will determine your ultimate rate of return.

‘Certainty’ and rate of return are inversely related. If you want ‘certainty’, like a money market or a Treasury bond, your returns will be scant. Factor in inflation, and your ‘certain’ return is actually negative.

If you can accept ‘uncertainty’, now you’re in the game. Embrace uncertainly and buckle up for a wild and rewarding ride!