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Net Worth To Be In America's Upper, Middle & Lower Class - YouTube
Channel: Practical Wisdom - Interesting Ideas
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The total value of all your assets minus the
total value of all your obligations equals your
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net worth. To put it another way, net worth is
the difference between what one has, and what one
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owes. You have a positive net worth if your assets
outnumber your obligations. You have a negative
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net worth if your liabilities exceed your assets.
According to a 2020 Gallup poll, 72% of Americans
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stated they belonged to the middle or
working classes, when asked how they define
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their social class. People also consider
other characteristics, such as education,
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locality, and family background, when defining
their social class, according to experts.
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Larger economic trends may also have an
impact on how people perceive their social
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status. Economic factors such as excessive
inflation, waves of employee resignations,
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struggling small enterprises, and other
repercussions of the coronavirus pandemic
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have had an impact on worker and business
prosperity and health in recent years.
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Unfortunately, current class-related
statistics from 2019 does not account
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for the pandemic’s economic impact, and we
won’t see the numbers until late 2022 or later.
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“The evidence implies that the median American
household income is either stable or slightly down
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compared to incomes in 2019,” says Rakesh Kochhar,
a senior researcher at Pew Research Center.
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“Inflation has increased since 2020, peaking
in 2021. However, we do not yet know what
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has happened to wages. Real incomes may
be impacted by the pace of inflation.”
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The average household net worth in the
United States in 2019 (the most recent
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statistics available) was $445,900, according
to data from the United States Census Bureau.
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$118,200 was the median net worth.
This is a significant disparity,
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demonstrating how wealth concentration among the
wealthiest households can affect the average.
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Class distinctions and net worth
The term “class” refers to a power structure based
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on social and economic position. Class and money
are not synonymous, even though they are strongly
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related. Our attitudes, beliefs, and expectations
are heavily influenced by our social status.
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These impressions have a long-term
impact on how we think and act.
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For the vast majority of people, our social status
is the most important determinant in deciding
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which income bracket we will remain in.
There are three main types of classes;
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The Upper class, The Middle class, and The Lower
or sometimes referred to as the working class.
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The United States Census Bureau employs quintiles
to dig further into the country’s wealth. A
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quintile, like a quartile, represents one-fifth of
a group. The middle class can be better understood
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by segmenting Americans into five economic groups.
The division with the smallest net worth is the
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bottom wealth quintile. The richest 20% of
households belong to the top wealth quintile.
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Younger households, and those with little
education, make up the bottom quintile.
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The younger generations have had
less opportunity to accumulate money,
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and there is a link between educational attainment
and wealth accumulation. The top quintile has a
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higher proportion of older households and
those with the highest level of education.
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The Middle class
The middle class is frequently
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defined as the three quintiles, in the middle
income distribution. The Lower middle class,
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middle class, and upper-middle class are
all terms used to describe this group.
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The term "middle class" has no one definition.
Wealth and financial security are influenced
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by a person's income, net worth, education, and
occupation. In the end, middle-class people enjoy
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a moderate sense of financial freedom, but they
still need to rely on things like their continued
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earning potential, and credit to fund substantial
costs or buy significant assets. The middle
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class is defined by the Pew Research Center as
households earning between two-thirds and double
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the median US household income, which was $61,372
in 2017, according to the US Census Bureau.
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People earning between $42,000 and $126,000,
according to Pew, are classified as middle-income.
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The middle class makes up 52% which is a slight
majority of the population in the United States,
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although it is the smallest it has been in nearly
half a century. The middle class’s proportion of
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income has decreased from 62 percent in 1970 to 43
percent in 2014. Due to a growth in population at
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the extremes of the economic spectrum, the middle
class is diminishing. ”You have to judge yourself
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in the context of where you live and the cost
of living to know if you’re truly middle class,”
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Money with Katie’s Katie Gatti explained. “The
majority of a person’s net worth is tied up in
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their home, which is the most obvious marker of
someone who is middle class.” In other words,
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you’re middle class if your net worth is $500,000
and your home accounts for $450,000 of that.
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Managers, small business owners, instructors,
and secretaries make up the lower middle class.
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Doctors, attorneys, stockbrokers, and
CEOs are among the upper middle class’s,
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these are highly educated individuals
and professional with high incomes.
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The Upper class
The upper class, which accounts for
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only 1 to 3% of the US population, owns more than
25% of the country’s wealth. There are two groups
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in this class: lower upper and higher upper.
A net worth of $1.9 million, according to
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Schwab’s 2021 Modern Wealth Survey respondents,
defines a person as affluent. The typical
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household net worth in the United States, on
the other hand, is less than half of that.
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However, wealth is in the eye of the beholder, and
a person’s impression of riches can be influenced
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by a variety of factors such as his or her
location, occupation, community, and background.
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As new generations enter maturity and
redefine success, such perceptions may change.
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Indeed, according to the annual Schwab study,
people are lowering the bar for what they
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consider to be wealthy. In comparison to 2021
norms, respondents to the 2020 study described a
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net worth of $2.6 million as the wealth threshold.
According to Amy Richardson, a certified financial
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advisor on Schwab’s Intelligent Portfolios Premium
team, rising inflation and low unemployment rates
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are both factors that affect how people perceive
wealth, in addition to the coronavirus outbreak.
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“We don’t know how this bout of inflation
will play out, but in the short term,
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regardless of their unique notions about
wealth, many individuals feel like they
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need to obtain more to reach where they
want to go,” Richardson stated in an email.
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”A lot of individuals who are wealthy in our
nation are wealthy not because of income,
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but because they possess assets, such as
real estate or other investments that have
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gained,” Phillips adds, whereas money pays for
a person’s lifestyle and day-to-day expenses.
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Those with “new money,” or money earned
from investments, commercial initiatives,
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and other sources, belong to the lower upper
class. Those aristocratic and “high society”
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families with “old money” who have been wealthy
for generations make up the upper-upper class.
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The revenue from their inherited wealth is used
to support these extraordinarily wealthy people.
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The upper-upper class has higher
status than the lower upper class.
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The Lower/working class
For many people, poverty is more of an identity
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or a series of events than a financial indicator.
If you’ve overdrawn your account at the grocery
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shop or spent nights sleeping in your car, you
may feel destitute. If your parents were poor,
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or if you can’t afford new clothes or
a good education, you could feel poor.
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Poverty, on the other hand, is defined
by more than an emotion or an experience.
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The poor and the lower-middle class are
separated by government poverty measurements
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and various income limits. Poverty might be
difficult to define. “You may feel like you’re
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really struggling, and you may be,” Gregory Acs,
vice president for income and benefits policy at
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the Urban Institute, adds, “but your income
could be far above the poverty threshold.”
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Individuals and families can utilize a variety
of methods to determine whether they fall into a
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specific definition of poverty. According to the
US Census Bureau, the official poverty rate was
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12.3 percent in 2017, with African-Americans and
Hispanics experiencing significantly higher rates.
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According to the 2017 poverty threshold
provided by the US Census Bureau,
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an individual under the age of 65 with
no children earns $12,752 per year,
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which is below the poverty line. As the size
of the household grows, so does this number. A
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four-person household with two children under the
age of 18 falls below the poverty line at $24,858.
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With revised methodology and data, another
metric, the supplemental poverty measure,
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tries to improve the approach to
assessing income and poverty in the US.
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The supplementary poverty rate was 13.9 percent
in 2017. According to the supplemental poverty
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measure, the poverty level for two-adult-two-child
households without mortgages was $23,261 in 2017,
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and $27,085 for two adult-two-child
households with mortgages was $27,085 in 2017.
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Poverty can be defined in more ways than one.
Just because you aren’t poor doesn’t mean you
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aren’t in need of help. Someone with a low income
but access to money and assets, on the other hand,
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may not be – or feel – destitute at all.
The media frequently stigmatizes the lower
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class as “the underclass,” incorrectly portraying
impoverished people as welfare mothers who abuse
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the system by having an increasing number of
children, welfare fathers who are able to work
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but do not, drug addicts, criminals, and societal
“trash.” Dishwashers, cashiers, maids, and servers
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are among the class’s unskilled workers, who
are frequently underpaid and have limited
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opportunities for growth. The working poor is a
term that is frequently used to describe them.
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Carpenters, plumbers, and electricians are among
the skilled workers in this sector, and they are
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frequently referred to as blue collar workers.
Secretaries, teachers, and computer technicians
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may earn more money than middle-class workers,
but their professions are also more physically
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demanding and, in some cases, dangerous.
The Average net worth by age and education
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Because households collect assets over time,
such as real estate, cars or other vehicles,
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and retirement savings, net worth rises with age.
Net worth and education are strongly linked,
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ss per a Federal Reserve research,
education can assist in the creation
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of wealth in three different ways:
• The head-start effect: College-educated
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parents are more likely to earn more than
their noncollege-educated counterparts,
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potentially giving their children a leg up in
life by allowing them access to better-performing
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school districts, private schools, and tutors.
• The upward-mobility effect: A youngster born
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into a family without a college diploma can
significantly enhance their economic status
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by earning a diploma. In comparison to where they
would be without a degree, such a family’s income
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percentile ranking is projected to climb by 23%.
• The downward-mobility effect happens when
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offspring of college-educated parents
do not go on to get a college diploma.
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Statistically they drag down
their wealth by 18 percentiles.
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Depending on your financial status, there may
be federal or state programs that might help
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you with housing, food, and educational costs.
Government programs such as Social Security,
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unemployment insurance, and refundable tax
credits such as the earned income tax credit, are
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all designed to help people get out of poverty.
Understanding if you qualify for benefits and how
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to get them might help you build a safety net.
It’s also a good idea to do everything you can
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to get and keep a decent job, with room for
advancement. The surest, best thing to do for
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people who are impoverished but able-bodied
and pretty healthy, is to work, and to work
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at a profession that not only pays well but
also offers opportunities for advancement.
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Working for a company that does not provide paid
sick leave, has even been connected to poverty,
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according to one study, so seeking or
fighting for these benefits is critical.
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For others, no amount of accumulated riches will
suffice, and many people who meet these criteria
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may not consider themselves wealthy. Others who
are suffering with debt or unemployment may feel
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defeated when they see these wealth standards.
Experts claim that knowing how you stack up
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against your peers might help you learn about
money management and good financial practices.
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They recommend collecting wage cues
from coworkers and competitors,
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as well as developing net worth goals that take
into account the possibilities found in peers,
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as well as your own unique circumstances.
One crucial indicator of your financial
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well-being is your net worth. It shows
crucial information about your ability
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to pay off debts and have assets accessible
for long-term living expenditures, retirement,
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and estate planning since it quantifies the gap
between what you possess and what you still owe.
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Simply, the more money you have, the
more financial freedom you'll have.
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So, where do you stand in the American
economic hierarchy? To figure out where
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you fall, consider your income, education,
marital status, location, family history,
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gut instinct, and a variety of other
criteria. However, the basic conclusion
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is that, figuring out the answer is more
complicated than simply looking at a number.
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I hope you guys enjoyed the video, and
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