Is $150k a Good Salary in the US?

$150k per year is an excellent salary for an individual in the US as it’s well above the median. It’s important however to compare your salary with similar roles in other firms to get a good market-based benchmark for fair pay. Additionally you will have to consider your level of expenses to assess whether $150,000 is sufficient or not.

Let’s take a closer look at how far that $150k can stretch!

What’s considered a good salary in the US?

A good salary in the US is likely to start at around $60,000. Let’s look at some statistics to put these figures in context.

For full-time, year-round workers in the US, the median income is around $56,500. However these statistics vary dramatically across gender as men have a higher median income of around $61,200 whereas women are much lower at $51,200.

So with these figures in mind, let’s again ask the question – is $150k a good salary in the US? Yes, the salary of $150000 is considered excellent as it is well above the median of $56,473 for full-time and year-round workers in the US. This means half the people in this category earn more than $56,473, while the other half earn less than that.

Diving in further, it is also higher than the median for men, which is $61,180.

Living Costs to Consider

An important aspect to consider whether you salary is considered ‘good’ or not is to see whether your income level is sufficient to cover your needs. Factors that can impact whether or not you have a ‘good salary’ for your needs include the following

Cost of Living

If you’re living in a Californian city as opposed to residing in the suburbs of Texas or Alabama, you’re likely to spend more money just to keep the lights on. Living wages in metropolitan areas will be much higher to compensate for this.

Rent, food, energy bills and transportation will all define whether or not you need to earn much more than the $150,000 as defined above. If you are a renter, in some cases you will have to demonstrate that your income is at least 3x the monthly rent payment. In such situations, with a salary of $150k before taxes, your ability to rent properties will be limited to those with a monthly rent of roughly $4,170 or lower.

As a side note, at this point your salary is high enough that you should consider buying a home instead. It’s a great way to build your equity rather than giving it all away to someone else! Try out our mortgage calculator to see how this could work for you!

Household Size

Of course, the size of your family will impact how much you need to earn. I’ll cover this in a little more detail for you below, but it’s simple math! If it’s just you and a partner, you’ll spend less, hypothetically, than if you have two to three children to feed and clothe.

Taxation

Taxes, of course, are where things can get a little tricky. The salaries I’ve discussed thus far are before you pay the IRS. The higher your pay, the higher your tax bracket. If you earn $150000 per year, you’re likely paying around $42,000 of that to the taxman – and that’s just based on current rates and figures.

Your mileage may vary based on the state you live in, whether you are married or not, and whether you have any other deductions that you can claim. Being married can make a big difference on your income tax bill, as opposed to being single – often by a couple of thousand dollars! If you earn bonuses on top of that, your tax rates can climb quite quickly.

If you own a house, you also have to remember that you will likely owe property taxes, which can be quite hefty in some areas.

Is $150k a good salary for a single person?

On average, the living expenses for a single person in the US are around $41,000 per year (~$3,420 per month). When considering that an annual salary of $150,000 after tax will amount to around $103-112k after taxes, you’re likely to be very comfortable as a single person.

With a salary of $150k, you are in the top 4% of wage earners in the country which means you’re in the top leagues. If you’re wondering which sectors let you earn a $150k salary, take a look at our database on incomes by occupation.

As a result, you should have plenty left over to build your savings and emergency pot, invest to grow your wealth. In fact you can easily save more than $2,000 a month! What’s more, you will easily have more left over to use for your personal pleasure!

Of course there are many factors that will be unique to your situation. Location and your spending habits will be the two biggest drivers of your expenses, so you will have to factor those in. Regardless though, a salary of $150,000 is very good for a single person to live on!

If you’re interested in seeing further detail of the breakdown of expenses, I’ve covered the typical monthly expenses for an average single person in the US. Check out the article for more details!

Is 150k a year good for a family of 4?

On average, a family of four (two adults and two kids) can expect to incur an annual expenditure of between $93,000 to $103,000 ($7,750 to $8,600 per month). A household income of $150k (pre-tax) is therefore more than sufficient for a family of four to live comfortably.

Remember that household income may be different than just your salary. If your household has two working adults, then your household income is the total of what both of you earn.

A household earning $150k a year is in the top 18% households in the US, so that’s a great position to be in! Our household income percentile calculator for the US and a more specific household income percentile calculator by state can help you get more fine-grained data.

Even with the higher expenses of a family, I think you could still potentially aim to save up to $1,000 a month. This puts your family’s financial stability on a great pathway.

If you’re interested in seeing further detail, I’ve covered in detail the typical monthly expenses for an average family in the US. Check out the article for more details!

Is $150,000 a year considered rich?

Sadly, $150,000 a year isn’t considered ‘rich’ – if you mean completely financially free. It’s comfortable for single people to live on, but even then, costs are rising, and your living demands could change at any time.

Before we go further – it’s important to define the difference between your income and your net worth. In order to be rich, not only do you need to have a high net worth, but you also need to have income level.

‘Rich’, or at least ‘wealthy’, doesn’t appear to be a status you can achieve until you have almost $2 million in the bank. That’s according to the Modern Wealth Survey, which takes into account opinions of working people and families across the US.

You also need to take a look at who are the highest earners in the country, and what percentage they make up nationwide. For example, to be in the top 1% of earners in the US, you’d need to be making anywhere from $350,000, if you live in West Virgina, to over $900,000 if you live in Connecticut. And yes, I’m talking about how much you need to earn each year!

Unfortunately that $80k a year of salary may not even get you into the top 15% of America’s highest earning people.

So while $150,000 per year is actually really – and may be very comfortable for lots of people and families across America – it’s sadly not what you’d call ‘rich’. However if you save and invest your money regularly, you might well be on your way to becoming a millionaire.

Before You Go…

Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles.

In a nutshell, the fastest way to becoming financially free is to cut your debt, minimize unnecessary expenses, so you can save and invest your money!

There are plenty of investment books and podcasts that you can use as a learning resource along the way to help you reach your goal faster.

If you have a target retirement number in mind, do check out our Coast FIRE calculator to see how much you need to save to retire with the lifestyle that you have in mind. See if you can get to $7 million in net worth!

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