In 2010, the typical middle class family had financial assets of $27,300 – including retirement savings but not pensions – which was 28% less than the $37,800 held in 2007.

That's according to a new report released Tuesday, “The Financial Status and Decision-Making of the American Middle Class”, from the Consumer Federation of America and Primerica Inc., a distributor of financial products to middle income families.

The findings came from a national survey of 2,015 adult Americans.

The typical middle class family, defined as those with household incomes between $30,000 and $100,000, had financial assets of $27,300, including $3,900 in checking and/or savings accounts.

Most of these financial assets represented money in contributory retirement accounts, but only about three-fifths of all families (61%) had such an account. A number of middle class families did have pensions, the data showed.

For middle class families, the typical debt payment to income ratio was 20% with 9% having debt payments that were overdue by 60 days or more. Nearly half (49%) still carried credit card debt from month to month, and the median debt for these families was $2,700.

The decline in housing prices was the main reason that the net assets of the typical middle income family declined 35%, from $145,600 to $94,700, according to the report.

Only 21% of the middle class families had a cash value life insurance policy, 15% stocks outside a retirement account, 14% certificates of deposit, and 13 % U.S. Savings Bonds.

Over half of these families (53%) had installment debt whose typical amount was $13,500. Almost all of this debt represented auto loans and student loans. These families held consumer and mortgage debt that was, typically, $85,400 in 2007 and $84,400 in 2010.

The findings showed that middle class Americans were much more risk-averse than those with higher incomes. If given $1 million to invest for retirement, only 21% of middle class Americans, compared to 48% of higher-income persons (incomes $100,000 and over), would invest mainly in stocks, bonds and/or mutual funds.

Nineteen percent of the middle class group would invest most of their funds in a savings account while 25% would invest mainly in real estate.

When it comes to making financial decisions, 81% of the report's respondents rated their ability to budget income as good or excellent. Eighty percent said the same for managing credit card debt, 63% for their ability to save for retirement and 67% for their ability to purchase a mortgage loan.

Still, two-thirds of those surveyed acknowledged having made financial mistakes, often costly ones.

“Considering their past mistakes and the complexity of the financial services marketplace, we were surprised at how highly most middle class Americans rate their ability to make a variety of financial decisions and how infrequently they rely on information from the Internet and publications,” said CFA Executive Director Stephen Brobeck.

Two-thirds of middle class Americans (67%) said that, in the past, they had made at least one “really bad financial decision,” and nearly half of those questioned (47%) acknowledged that they had made more than one bad decision. The typical (median) cost of these bad decisions was $5,000, but the average cost was $23,000.

Few of these Americans said their main source of information or advice about specific financial decisions would be from the Internet, books, magazines or TV. And a number said they would not seek information or advice in making these decisions.

For saving and investing 15% said they would rely on the Internet, publications or TV for the information, yet another 17% said they wouldn't seek any information or advice, and just make a decision. However, for this kind of decision, 45% said they would use information and advice from a financial professional.

The report's analysis was conducted by ORC International in July and through a statistical examination of the Federal Reserve Board's 2010 Survey of Consumer Finances, by Professor Catherine Montalto of The Ohio State University.

Instant Insights /

Middle Class Families Experience $10,500 Drop in Assets: Report

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