I think retirement funds and paid off debt get included in net worth balance sheet calculations, even though they don’t help with this year’s bills.
Generally - there are for examples various off-the-cuff ways to value pensions.
At the risk of too much digression, here’s a reasonable discussion about calculating your net worth.
Yes it seems like a pension’s defined benefit should be given some value … should expected social security pay outs be also?? (I don’t think they are but they are similarly a defined benefit based on how much put in and age at starting withdrawals.)
Anyway. @Spice_Weasel has, by putting money into retirement funds and paying off student loan debt, built net worth wealth. For the sake of a hypothetical let us assume that with little debt, a home owned outright, and decent retirement savings their household’s net worth defines them as well off. Point remains that with their health costs and the illiquidity of their wealth, they still identify more with the sense of economic insecurity of “the middle class” and would scoff at a label of “wealthy”.
From the political rhetoric perspective “middle class” speaks to them, and many others who are not in an economist’s definition of middle class.
Fundamentally wealth is HARD to build in any reasonable quantity within one person’s lifetime, barring a few more or less windfall type situations, such as buying a house for a song when young, and selling it for many multiples of that in middle age due to gentrification or something along those lines. Or inheritances. Or starting a small business that is unusually successful.
Most of those are luck; you can’t bank on wealthier relatives leaving you money, or that your house will be worth 5x what you paid for it when you sell it, or that your entrepreneurial idea is going to pay off.
But… once you do get some wealth, it’s a virtuous circle- wealth tends to build on itself.
I think the issue with the upper middle class is that the incomes are high, but the wealth is not necessarily in line with that- they may own a house and they may have a 401k plan, but how much they’ve been putting into that is anyone’s guess (from what I understand most people are under-invested on them). And more importantly, neither are liquid. None of the income on either is realized in a way that is spendable by people in the present, nor are they easily utilized in case of disaster/economic hardship. So they’re just as dependent on their paychecks as anyone else, but stand to fall further if things do go south. Understandably, they’re going to fight tooth and nail against anything that could jeopardize that situation.
Looking I find this about that.
And as a significant portion of many individuals’ functional net worth wealth it is something that all but the very wealthy care a lot about, even as it is often parsed most as a middle class to working class issue.
I think that, in any economy, there is going to be variable levels of wealth.
Growing the middle class does 2 primary things: the middle class provide the bulk of our actual economic engines through spending on things, rather than investing. Growing the middle class also creates more opportunities for those in the lower tiers to move up, as there is more jobs. Not everyone stuck in the lower tiers is incapable of working, or doing middle class work (or even upper class work!) but in many cases those jobs, reaching that level, has baked in requirements that can make it VERY difficult to make the jump from Lower to Middle class.
Example (anecdotal): my mother got divorced, and was a single mom with a 9yo and a newborn, who had fled a violent marriage with no expectation of child support. It took 6 years of living on welfare for a program to come into being (a paid daycare program for adults attending school) to allow her to park my brother in day care so she could push through vo-tech classes and get a nursing certification.
Without that program, without cheap technical training, she would have stayed poor. As it was, even with me sent to live with my father in another state, she still struggled. She chose to move to a far more rural area and have a cheaper cost of living for many years in order to rebuild and take steps to more solidly move into that middle class lifestyle she wanted for herself and my brother.
It didn’t all work out, of course, because sometimes you can make all the right choices, and still fail. that’s life. But seeing her do it, gave me the boost I needed, and while, sure, 35 years ago I was living in a battered womens shelter with my mother, today (mostly due to my amazing wife) today I am solidly middle class. And happy to be here.
It can be argued that this class receives the most attention because they have lots of programs that were initially designed to help them (never mind that all the time they spend filling out forms and waiting to hear back gets in the way of job hunting). But the economy driver is the middle class, who are quickly sliding down to “lower” class as the rich get richer. The middle class is often well aware of the slide down to working class, even if they still call themselves middle class. They want to think positive. Political parties want to give them a reason to think positive in order to get their votes.
There is just a bigger percentage of the population in the middle class. Help the most amount of people that contribute to the economy. It sucks, but it makes sense why politicians are always talking about the middle class.
We need to be looking at both. Someone who is really wealthy may live quite well and have really very little personal income. Someone else may make a large income, but spend every penny and never have a decent net worth. One of the reasons that the upper middle class feels their position is precarious is that they generally spend to maintain a lifestyle, and really don’t amass wealth.
What is true however is the poor don’t have either wealth OR income in any significant amount, nor does anyone up to the upper middle class. There really isn’t a need for the distinction until you get to people who can save significant amounts of money - and either do or don’t.