When most people hear the phrase “high income,” they automatically think of millionaires and billionaires. But what about those who earn over six figures but don’t quite qualify as wealthy? How many people make over 100k in a year? What kind of lives do they lead, and what are their average expenses?
So, I decided to take a closer look at America’s high-income earners to see just what it takes to rake in that kind of cash. Let’s start with…
- What is a Six Figure Income?
- How Many People Make Over 100k in a Year?
- What A Six-Figure Salary Gets You?
- Jobs That Earn Six Figures
- Taxes On Six Figure Salary
- Lifestyle Inflation
- How to Overcome Lifestyle Inflation
- How to Make Six Figures Without a Salary
- Need more great advice on Making Money?
- How Many People Make Over 100k in a Year? – Final Thoughts
What is a Six Figure Income?
You often hear people talking about wanting to have a six-figure income, but what does that actually mean? A six figure income is an annual salary that falls between $100,000 and $999,999. That is a pretty wide range, which means there are quite a few people who qualify as high-income earners.
How Many People Make Over 100k in a Year?
Well, according to the US Census Bureau, in 2020, 24% of Americans make a six-figure income. That is nearly one in four people! And while that number has stayed relatively steady over the past few years, it is still a significant increase from previous decades. In 1970, for example, only 8% of Americans earned over $100,000 per year.
This means that the number of high-income earners is on the rise, which is good news for the economy. It also means that more people are able to afford luxuries and experiences that were once out of reach. In more negative terms, it does mean that goods and services have inflated in price, thereby making it more difficult for those who do not earn a high income to make ends meet.
What A Six-Figure Salary Gets You?
So, what can you expect if you find yourself in the 24% of Americans who make over $100,000 per year? Well, first and foremost, you can expect to pay a lot in taxes. The US has a progressive tax system, which means that the more you earn, the higher your tax rate will be. For those in the highest income bracket, you can expect to pay a federal tax rate of up to 37%.
That may not sound like much, but it adds up quickly!
In addition to paying more in taxes, those who make a six-figure income can also expect to have more disposable income. This means that you will have more money to spend on things like travel, restaurants, and entertainment. You may also find it easier to save for retirement or make other financial investments.
Jobs That Earn Six Figures
What kind of jobs are typically associated with a six-figure income? Well, there are a few different options. First, there are the obvious ones like doctors, lawyers, and corporate executives. But there are also a number of less traditional jobs that can also bring in a high income.
For example, as you know, a lot of professional athletes and celebrities earn six-figure incomes? While most of us will never have the opportunity to play in the NBA or star in a blockbuster movie, it is still interesting to see how much these people are paid.
There are also a number of jobs in the tech industry that can earn six figures. For example, software developers and web designers often make exceptionally good money. And with the ever-growing popularity of social media, there are now a number of “influencers” who are able to make a particularly good living simply by posting content online.
Taxes On Six Figure Salary
While a six-figure income certainly has its perks, it also comes with some drawbacks. One of the biggest is the amount of taxes you will have to pay. As I mentioned, the US has a progressive tax system, which means that those who make more money will pay a higher tax rate.
In addition to federal taxes, you will also have to pay state and local taxes. The amount you will pay will depend on the state you live in, but it is safe to say that those who make a six-figure income will have a significant amount of their earnings going towards taxes.
For example, if you live in California and earn 100k, your actual income after taxes will only be $75,178. However, if you live in Alabama, you will make $80,191 after taxes.
However, what often happens with an increase in salary is lifestyle inflation. This is when people spend more money as their incomes go up. For example, someone who was once content with a modest apartment may now feel the need to upgrade to a luxury condominium. Or someone who was happy to drive an older model car may now feel the need to buy a brand new BMW.
The problem with lifestyle inflation is that it can quickly eat into your disposable income. Before you know it, your increased salary may not feel like such a windfall after all!
How to Overcome Lifestyle Inflation
One of the best ways to overcome lifestyle inflation is to make a budget and stick to it. By being mindful of your spending, you can make sure that your increased income does not lead to an increase in your overall expenses.
You can treat yourself but try to remember the things you enjoyed doing before you had a six-figure income. For example, rather than going out to expensive restaurants all the time, you could cook at home more often. Or, instead of taking lavish vacations, you could take more modest trips closer to home.
The key is to be aware of the potential for lifestyle inflation and make an effort to avoid it. By doing so, you can make sure that your six-figure income does not end up costing you more than it is worth!
How to Make Six Figures Without a Salary
Okay, you may already have a day job that is never going to take you near your money goals. So, what can you do? Do you have to give up the job you love in order to fund your lifestyle?
No, you do not have to give up your job. But you may need to get creative in order to make the extra money you want. Here are a few ideas:
Start a side hustle
There are a number of ways to make extra money on the side. You could start a blog and sell advertising, become an Uber driver, or even start a pet sitting business.
The key is to find something that you are passionate about and then figure out a way to monetize it. There are endless possibilities, so take some time to brainstorm a few ideas.
Invest in real estate
This is a fantastic way to make a lot of money, but it does require a significant amount of upfront capital or the ability to borrow money at a good rate. If you have the money to invest, real estate can be an ideal option for earning a six figure income.
There are a number of ways to make money in real estate, from flipping houses to renting out properties. Again, the idea is to find something that you are enthusiastic about and then figure out a way to make money from it.
Pay off Debt
This may seem like an odd way to make six figures, but it can actually be quite effective. If you have a lot of high-interest debt, paying it off can be a great way to save money.
For example, let us say you have $50,000 in credit card debt with an interest rate of 20%. If you were to pay off that debt, you would save $10,000 in interest payments over the course of a year. That is a pretty significant amount of money!
Communicate with your Partner
This is probably the most important thing you can do if you want to make six figures without a salary. If you are in a relationship, it is important to communicate with your partner about your financial goals.
You need to be on the same page in order to make this work. Otherwise, one person may end up feeling like they are sacrificing more than the other.
Learn to Budget
This is a crucial step if you want to make six figures without a salary. You need to be very mindful of your spending in order to make this work.
There are a number of ways to budget, so find one that works for you. Whether it is the envelope system or something else, the key is to find a way to stick to it.
Invest in Yourself
This is something that a lot of people forget to do. But it is important to invest in yourself if you want to make six figures without a salary.
This could mean taking courses to improve your skills, investing in your health, or even just taking some time for yourself. Your aim is to discover ways to make yourself more valuable.
This is a tough one, but it may be necessary if you want to make six figures without a salary. If you have a lot of expenses, downsizing may be the best way to save money.
This could mean getting rid of your car, moving to a smaller home, or even getting rid of some of your possessions.
Start a Savings Account
It can seem obvious, but a high-interest savings account can really help you achieve your financial goals. If you want to make six figures without a salary, you need to start saving your money.
This approach requires you to find a savings account with a high-interest rate so you can grow your money quickly. This will help you reach your goal sooner.
Need more great advice on Making Money?
Let’s start with some Jobs That Can Make You A Millionaire and our guide to Careers That Make You Rich. Or, how about the Best 6 Figure Jobs, the Top Low Stress Jobs That Pay Really Well, or the Top Good High Income Skills To Learn in 2023.
Next, I’ve put together some top earning job opportunities covering various sectors, so check out the Best Paying Jobs In Energy, the Best Paying Jobs In Finance, the Top Highest Paying Trade Jobs, or the Top High Paying Entry Level Jobs, the Best Remote Jobs That Pay Well, and Best Remote Transcription Jobs That Pay Well if you would prefer to work from home.
Depending on your skill set, I also recommend checking out the Top Highest Paying Medical Jobs, the Top Highest Paying Sales Jobs, or the Top Highest Paying Engineering Jobs, along with Top Highest Paying IT Jobs, the Top Highest Paying Retail Jobs, and the best High Paying Truck Driver Jobs.
How Many People Make Over 100k in a Year? – Final Thoughts
Making a six-figure income is a great accomplishment. But it is important to be aware of the potential pitfalls.
Becoming one of the 24% of Americans who make 100k is possible even without a salary, but it takes some effort. If you are willing to work hard and get creative, you can find a way to make the money you want. Just remember to communicate with your partner and make a budget so that you do not overspend!
The very best of luck with reaching and exceeding this financial milestone!