There is a rather depressing analysis of Americans' household income in a recent issue of the New York Times. I invite you to read it here. The article and the institutes it cites use data to arrive at conclusions that may or not be satisfactory. As a 37-year-old professional and married father of two, I can only offer anecdotes and experiences from my perch that are also unsatisfactory. But I do feel compelled to testify as to how I see the lifestyle and standard of living of people in my age and professional cohort evolving.
The good news is that I feel we have enough income to satisfy our needs and to afford most of the things we want. We're able to live in a nice home and take very nice trips and keep two cars on the road. There are many gadgets at our home. We eat good food.
It seems as if there are barriers preventing us from the next tier of those amenities. I don't see a third car in our future, nor do I see a luxury car for us. That doesn't seem to be any bother, though. I don't see us making a jump up to a more extravagant sort of vacation than what we've typically done. I don't easily see us making the jump to a bigger home any time soon. If our standard of living is improving, and I think it is, the improvement is quite incremental.
We work long hours for our jobs, jobs that pay reasonably well. There are patches through which our income growth stalls, however. But we're very fortunate in how our income and employment seem very secure.
Though I know the rate of inflation is really pretty low it feels like there are many expenses necessary to support the lifestyle of a two-income married-with-two family in the suburbs. Childcare is a persistent cost. Minivans are expensive. Communication is expensive. Activities for the kids are either nearly free or expensive, with little alternatives in between.
A significant squeeze, I think, comes from the demand that we save for the future. Prudence demands that we save for retirement and for the kids' college. We cannot be assured other income will be there for us in the case of the former; trends indicate that we'll need awesome (or aweful) sums to afford tuition for the latter. These very significant long-term savings goals complicate intermediate-term savings goals.
The tax code seems to work against us. As the mortgage gets paid down, as nominal income goes up, as the deductible expense that is childcare starts to go away, the tax bill goes up. I'm setting aside increasing increments of my income to pay the IRS every April.
If this post has read as a complaint, I don't mean it to be. Articles like the one I posted at the front risk losing readers in their nerdy, dry analysis. They can also lead one toward wondering how figures lie and liars figure. It seems to me like the perspective of a father, husband, and professional in the middle class they describe sees the picture.