Depending on the state in which you live, a $150,000 salary can either go a long way...or not far at all. Whether or not you aspire to reach the top 1%, it’s always interesting to see how much a dollar can go in each state and whether or not you’re living in a pricier region.
Luckily, thanks to a report by the Economic Policy Institute, you can find out how much one must make per year to be considered as a one-percenter in your state. (1)
Here’s a comprehensive ranking by state in alphabetical order:
The 2 S’s That are Just as Important as Income
Did any of these figures surprise you? For some, you may be closer than you thought to the top 1%, while for others, it may seem distant and impossible to reach. But in terms of retirement, remember that a high income isn’t the sole key to retiring on your schedule and living the lifestyle you desire.
It’s true that having a high income is helpful, but the secret comes down to two S’s: spending and saving. It’s easier to retire early based on how much you save and how little you spend as opposed to a high income. This is for a few reasons. For one, if you’re spending at your income level, you’re more susceptible to what’s known as lifestyle inflation. As you earn more, you start spending more and living a lifestyle that may require more spending.
Additionally, if you’re used to living a certain lifestyle that requires a lot of spending, you’ll need a higher retirement income in order to maintain that lifestyle. While there’s no set number for how much you’ll need in retirement, many experts agree that the average retiree will need to replace about 80% of their income in retirement. If you can pay off your mortgage and other debt before retirement, this percentage may be even lower.
However, if you intend on traveling and spending more on entertainment and leisure in retirement, you may end up spending more than you did while working. This can be dangerous if you’re already a higher spender, especially if you want to retire early.
The moral of the story is, these figures may be interesting to learn, but an income isn’t the sole determiner of your future retirement.
How does your income compare to these figures? Do you feel more or less confident about your financial and retirement strategies? At Beacon Wealth Management, our mission is to help you make smart decisions about your money. If you have questions about your current financial strategies or future retirement plan, I encourage you to contact us for a complimentary financial review. We can answer any questions you have and help you gauge your progress toward your goals. To get started, call (304) 626-3900 or email me email@example.com.