How Americans define a middle-class lifestyle — and why they can’t reach it

"Americans also underestimate the income required for that lifestyle, suggesting that the popular image of middle-class security is more of an aspiration than a reality for most Americans."

https://www.washingtonpost.com/.../middle-class.../

Based on the poll, the top 6 things that Americans think they need to be considered as part of the middle class are:

1. Secure job
2. Ability to save money for the future
3. Ability to afford a $1000 emergency without debt
4. Ability to pay bills on time without worry
5. Having health insurance
6. Ability to retire comfortably

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#1 Secure job? Anyone with a job or seeking a job is relying on the decisions of the entrepreneur or those he is paying to make decisions. Employees have no security. A job is not secure. It is "at will" and based on the needs of the entrepreneur, not the employee. As long as the entrepreneur can get the desired ROI for the employee's time, knowledge, experience, or labor, the employee will receive an agreed-upon compensation. When the ROI is no longer acceptable, the entrepreneur will reassess the value of the employee and make the necessary business decisions.

#2 Save money? Earned income is taxed first and at the highest rate. Income is earned, then taxes are taken out, then employees are left to live off what's left. This includes saving and investing.

Consider this: The average household income in America is about $67,000 a year, and they will pay an average of $14,000 to $16,000 a year in taxes. So let's do the math: $67,000 - $14,000 = $53,000. That's what's left to live off of.

The problem is that the annual cost of living in America is about $65,000 a year. So that means many people are making $53,000, and spending $65,000 because they use credit cards, 401Ks, cash value life insurance, or anything they can pull money out of. The reality is that the average household income in America is going into debt $12,000 a year to work 40 hours a week, 50 weeks a year to take two weeks of paid vacation in a job that is NOT secure. (See #1)

#3 Emergency Fund of $1000? The cash flow is NOT enough to save and credit cards are being used to cover bills. (See #2)

#4 Pay Bills on Time? An unexpected job loss and extended unemployment can lead to an insurmountable financial crisis. (See #1 and #2)

#5 Health Insurance? Most people are relying on full-time employment for health insurance benefits. Remember, a job is NOT secure. (See #1)

#6 Retire Comfortably? How much per month do you need to retire comfortably? Let's say $5,000 per month. Based strictly on a 401K generating a 5% annual return, $1.2M is needed to maintain the principle. Everything hinders on experiencing no life disruptions like unemployment, market volatility, sickness, or divorce. (See #1)

If you understand what I have shared, then you have to figure out a way to solve this problem. The average American household is paying about 40% in taxes, and it just doesn't have to be that way.

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RECOMMENDATION: It's not what you make, it's what you keep. No one has to spend that much money in taxes!

If you are a business owner, you get massive tax benefits by owning a business. No having an LLC doesn't mean you have a business. For those of you that haven't started a home-based business (i.e. you have an intent to earn a profit), I recommend you find something. I don't care what that looks like. I don't care if it's lawn care or furniture restoration or drop shipping or a network marketing business.

It really doesn't matter to me. I just care that you find something that you're attempting to earn an income off of, so that you can offset the income that you're bringing in.

The reason why I say that is because the average household in America is going to save $4,000 - $8,000 a year in taxes by having a home based business. Once you understand that the greatest tax category that you can possibly be in is as a business owner tax category, then you can start writing off your meals and your mileage, your cell phone, your Internet, your business use of home and your travel, and well over 100 other things that you can take advantage of.

And no, you're not more likely to be audited because you're a home based business owner. That's not true. You just need to do the three home based business qualifying things to take advantage of the tax deductions that you're entitled to take advantage of. Businesses are good for the economy because once you start creating income, you can eventually start hiring employees. (See the IRS Code, your Enrolled Agent, CPA or any other tax professionals to get your specific situation evaluated, and if you get any push back, then reach out.)

This is why Congress gives us the benefit of taking advantage of these tax deductions. You can offset any of your income against any other income that you have. So if you have a loss from the business of $10,000, then that loss goes against your W2 job of that $10,000. So you're not paying taxes. Let's say you're in a 32% tax bracket. That's $3,200 a year that it's saving you in taxes. You would be much better off to put $400+ per month in your pocket rather than giving that over to the government. So I hope that helps.

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It is tax season now, inflation has families in need of an additional $11,434 to meet essentials, and layoffs at big companies seem to be reported weekly. I am writing this detailed post to assist all of you in having meaningful, strategic conversations with those you trust....even it that's only yourself.

As for me, as an Executive and Business Coach, I have a goal of helping 100 veterans to execute a plan to earn $12,000+ in 2024. Based on the target of $12,000, we will start an LLC which limits your liability and it allows you to treat your business as an S corporation if you so choose and need to. As an S corporation, you will be able to bypass 80% of your self employment taxes. Self employment taxes are 15.3% of every dollar you make in net income from a business.

So if you make, $10,000, 15.3% of that means you're going to pay $1,500 in self employment taxes or you can be an S-corporation, and you can actually bypass 80% of those self employment taxes. So if you have a home based business right now and you're making more than $12,000 a year, I recommend establishing an LLC. Once your income starts grows to $12,000 net income in a year, meaning after expenses, then I recommend treating that LLC as an S corporation for tax purposes. So I hope that's helpful.

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On page 29 of “Life Is Rich: How To Create Lasting Wealth” (www.LifeIsRichGlobal.com/lifeisrichbook), I wrote: “An even bigger issue is that most people don’t have a level of income to fund their plan. The good news is if you’re reading this information in 2013, you have at least ten years left. The bad news is that most people will wait too long to take action. The purpose of this book is to empower you with practical information to positively turn your financial world upside down. Once you understand the concepts, everything will change for you because you’ll be mentally prepared to survive and to thrive. My goal is to prepare you to respond just as I trained my soldiers to respond to unseen dangers on the battlefield. This is very personal to me. I see myself in them, and I relive my journey.”

Was I right in 2013 when I said that readers had 10 years to take action. 2023 was tough for so many.

It's 2024! The economy is getting worse. I don't think it's going to get any better anytime soon. I think everybody on here can probably agree with me on that.

Start a home-based business. I can help you evaluate the various options based on my personal and professional experiences. Beware of anyone who is giving you ONLY their "opinion" or "unsuccessful" experience.

At the end of the day, it'll save the average American worker an average of $4000 - $8,000 a year in taxes. In addition to that, it allows everyone to secure their financial well-being just in case there is an unexpected life disruption. (See the IRS Code, your Enrolled Agent, CPA, or any other tax professionals to get your specific situation evaluated, and if you get any pushback, then reach out.)

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About Me: Former combat soldier, 96 3rd Regimental Commander, Infantry Officer/Ranger. Executive and Business Coach. Author of "Life Is Rich: How To Create Lasting Wealth" (please Skip Amazon). Former personal trainer turned Tax Franchise Owner turned UBS Wealth Advisor turned CFO of 2x INC500 fastest growing company turned Coach who coached, and then married someone who financially succeeded in a home-based business. Connect for additional resources and specific recommendations: LI, IG, and FB: @AskNateScott. Just let me know who you are, and I'll communicate with you. Blessings.