Middle-class Americans want to know more about how the wealthy make money. Here’s the answer

As the new year approaches, building wealth is a top priority for “hardworking” middle-class Americans, according to a new survey from investing app Stash.

Despite political and social issues, money was the No. 1 concern for most respondents, who were polled during the first two weeks in October amid House leadership uncertainty in Congress and the start of the Israel-Hamas war.

What’s more, nearly two-thirds of respondents said they thought about how wealthier people make money either “sometimes” or “all the time.”

Money is “such a primary source of anxiety” and everyday Americans want to know how higher earners “achieved that financial security,” said Stash CEO Liza Landsman. 

The survey polled 2,000 Americans who work at least 30 hours per week and have an annual income between $50,000 and $150,000.

Those polled meet Pew Research Center’s definition of “middle class,” which is Americans making between two-thirds and twice the median American household income, or $74,580 in 2022, according to the U.S. Census Bureau.

The bottom 80% of U.S. households receive more than 93% of their adjusted gross income from wages and retirement income, according to a Brookings Institution analysis of the latest IRS data.

By comparison, the top 0.1% of households get less than 25% of their earnings from wages or retirement income. These top earners receive most of their income from investments — such as interest, dividends and capital gains — and businesses, which often provide better tax treatment, experts say.

The tax code “incentivizes you to invest in yourself,” said Sheneya Wilson, a certified public accountant and founder of Fola Financial in New York. She encourages her salary and wage-earning clients to “diversify income.”

While most Americans pay regular income taxes on wages from each paycheck, with the top rate at 37% for 2023, long-term capital gains, applying to assets owned for more than one year, have more favorable rates, she said. Those top out at 20% for 2023.

“The more diversification you have in income, the more favorable the tax code becomes for you,” Wilson said.

Stash’s Landsman says that with a large chunk of investment income for top earners, “there’s an important unlock there for low- and middle-income consumers.”

“Access to the equity markets is the single greatest wealth creation engine the country has known for the last several decades,” she said.

Regardless of income, wage earners can leverage the power of investing by starting early. Still, Landsman warns that there’s no “fast pass” to lasting economic security.

“It’s really a game of inches where very small, very tiny behavioral changes can make a huge positive impact in your life,” she said.