The illusion of prosperity: How much money do you really need in Germany?”

The illusion of prosperity: How much money do you really need in Germany?”

What does the average German think about their income and social situation? A recent survey has found that many of us have a fairly distorted perception of our own financial situation. According to a report by the German Institute for Economic Affairs (IW), 54.5 percent believe they belong to the middle class, while in fact only 48 percent are. This discrepancy sheds light on a deep-rooted misunderstanding about social classes in Germany. Experts like Marius Busemeyer emphasize that the lower and upper classes in particular often do not assess their situation correctly. A 2022 study shows that poor people underestimate their relative poverty, while wealthier people tend to estimate their wealth as less than it actually is.

“The threshold for income wealth is set far too high,” says economist Maximilian Stockhausen. The estimate of how many rich people there actually are is usually more optimistic than reality suggests. As a result, many people mistakenly classify themselves as middle class. A needs-weighted household net income of between 3,880 and 7,280 euros is considered middle class in this country for a family with two parents and two underage children, the experts report in the article Mercury.

Income stratification and poverty risk

A look at the numbers shows how much income stratification can vary in Germany. The lowest income brackets are defined by earning less than 60 percent of the median income, which puts many people at an increased risk of poverty. The Poverty and Wealth Report highlights that although the proportion of the population living in relative income poverty has varied in recent years, the risk of poverty remains relevant. After Bpb In 2022, the poverty risk rate in Germany was 15 percent.

The development of households at risk of poverty is particularly alarming. An EU-wide definition states that someone is considered poor if their income is below the at-risk-of-poverty line. In Germany this is less than 60 percent of the median. For an individual living alone, this currently corresponds to around 1,250 euros per month. For a household with two adults and a child under 14, it is at least 2,250 euros per month Destatis explained.

The misperception of wealth

The question of what wealth actually means is like an oversized shadow: many people don't know how to properly grasp it. The difficulty of clearly defining the term “wealth” leads many people to misjudge their social affiliation. It was found that people give disproportionately high values ​​for their own wealth and believe that there are more rich people among us than the statistics show. The IW experts also criticize that using median income to define the middle class can be misleading because real income value awareness is highly distorted.

In summary, it can be said that the entire discussion about income, poverty and wealth in Germany is a complex matter. The rise in inequality and the associated confusion about social classes shed new light on the challenges that lie ahead. It is important that we deal with these topics more intensively in order to develop a better understanding of the social structures in our society. Your own perception is often the first step to solving a problem.