DANIEL DE VISÉ USA TODAY
Is a six-figure salary enough to make anyone feel wealthy these days? How about a $500,000 salary?
In this inflationary era, benchmarks of wealth are moving targets. Everything seems to cost more.
Cumulative inflation has raised prices by 22% since early 2020, according to an analysis by the personal finance site Bankrate. Viewed another way, you would need to spend about $1,220 in late 2024 to leverage the same buying power that $1,000 got you in January 2020.
The average American earns a little less than $60,000 a year, according to federal data. But most of us think you need two or three times that much to achieve financial security, let alone wealth.
“There’s so much that goes into the perception of being wealthy,” said Sarah Foster, an economic analyst at Bankrate. “Inflation is a huge part of it.”
“The idea of having a fancy car in the driveway and a beautiful family home used to be the stereotypical idea of the middle class, and now it’s feeling more and more exclusive,” she said.
The best-paying jobs now deliver salaries in the $400,000 range. But a $400,000 salary won’t put you in the highest federal income tax bracket in 2025.
Here are seven salaries that illustrate how American wealth looks at the close of 2024.
FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023.
DADO RUVIC, REUTERS
$626,350
Earn more than that in 2025, and you’ll pay the top federal income tax rate for individual earners, 37%.
Under our progressive tax system, the more you earn, the higher your tax rate. The top rate is reserved for top earners.
The upward march in tax brackets illustrates the impact of inflation. Back in 2020, the 37% tax rate kicked in at $518,400 in individual income.
$520,000
That’s how much income Americans think they would need, on average, to feel rich, according to Bankrate’s Financial Freedom Survey published in July.
That salary would put you comfortably among the top 2% of American earners, according to Census data.
Interestingly, when Bankrate asked Americans what salary would make them feel merely comfortable, or financially secure, they gave a much lower number: $186,000.
“Comfortable is, you have everything you need, whereas rich is being able to do a little more on top of that,” said Foster, from Bankrate.
$483,000
That is the salary Americans thought they would need to feel rich in 2023, according to the same Bankrate survey.
$400,000
The Biden Administration seized on that figure in recent initiatives as a somewhat arbitrary income threshold for folks they consider the super-rich.
When President Joe Biden proposed tax increases for the wealthy in 2023, he pledged that people earning less than $400,000 would not pay “an additional single penny” in taxes.
When the IRS launched a campaign against wealthy tax cheats that year, the agency assured the public that audit rates would increase only for people earning more than $400,000.
As an annual salary, the figure corresponds roughly to the top 2% of American earners.
Why $400,000?
“That’s a number everybody can wrap their minds around,” said Caleb Silver, editor-in-chief of Investopedia, the financial media site.
$340,667
That’s the average income for the top 5% of earners in West Virginia, as of 2023, according to an analysis released Thursday by GOBankingRates, a personal finance site.
In Connecticut, by contrast, the average earner in the top 5% pulled down $676,016.
“Wealth, and how much you need to feel wealthy, depends a lot on how much you spend, and on where you live,” Silver said.
Top incomes are rising fast. In 2018, the top 5% earned more than $500,000, on average, in only two states. In 2023, the top 5% earned more than $500,000 in 12 states.
“It almost does feel like there are some people who live in a different world,” said Andrew Murray, head of internal research at GOBankingRates. “I couldn’t even imagine that amount of wealth.”
$295,000
That income puts you in the top 5% of American households, according to the 2022 Census.
$295,000
That income puts you in the top 5% of American households, according to the 2022 Census.
Gary Reber Comments:
This article states that “The average American earns a little less than $60,000 a year, according to federal data.” Then there are those dependent on Social Security, whose income is far less. All are delegated to a wage system, while the rich are not.
The rich and the oligarchs are rich and powerful because they have and continue to concentrate among themselves ever more productive, income and wealth generating capital assets (the non-human factor of production) while the vast majority of Americans are wage slaves stuck in a wage system of growing insecurity as advancing technology eliminates the necessity for masses of human labor to produce goods and services.
My new, award-winning book OWN Turning Every Citizen Into A Productive Owner addresses the problem of concentrated capital ownership with less than 10 percent of the citizenry owning America and the more than 90 percent relegated to a wage system to earn income or government welfare dependency. Proposed are solutions to massive economic inequality, globalization, the mis-guided minimum wage and unionization movements, wage system dependency and tectonic shifts in the technologies of production that destroy jobs and devalue labor. Proposed are financial mechanisms and reforms to the tax, and monetary and credit systems to broaden capital ownership simultaneously with the growth of the economy. This new paradigm will enable the people of the United States to build a future economy that can support general affluence for every citizen. As a result, capital ownership would become an integral part of earning income and building wealth while ever-advancing technology eliminates the necessity for a massive workforce and jobs for those workers. The proposed Economic Democracy Act will create equal opportunity access and the means to acquire capital using self-liquidating insured, interest-free capital credit for every citizen, every year from birth to death, to become a productive capital owner in the technological frontier. Without such universal citizen access to the financial means to acquire capital with interest-free, insured capital credit, and the ability to repay those capital loans with the future pre-tax earnings of the capital itself, the increasing concentration of wealth and capital-generated income will accelerate, as advancing technology replaces labor as a productive input.
