As we are sure all readers of this blog know (and really everyone should know!) the cost of living varies by state/cist as do the salaries paid for the same job, they too vary by state and city. A recent study done by the Economic Policy Institute shows what it takes to be in the top 1% of income by state, and the data is below.
Now what many people do not know, and I never could quite understand, is that while yes, salaries may be higher in some expensive parts of the country, that higher income is almost always offset by the cost of living in those states. So while you may make more money, all the “extra” income goes towards paying expenses that come with living in a high priced region..
One thing I have learned is that if you live in a high priced state, such as CA, CT, Washington DC, NY, and make XXX income you can make less money (YYYY income) in a lower cost state, but the cost of living is so much lower living there that your money goes much further and you end up coming out way ahead. In addition, your quality of life is often much higher due to less congestion, more amenities, less commuting time, etc. There is more data on this located on various cost of living calculator sites.
Anyhow, the data on top 1% by income by state also show that blaring discrepancy…on how your income (even less money) goes so much further in other parts of the country. I always read articles on how many people do not know this basic stat (see basic financial literacy skills), I have friends/acquaintances how do not know this, and we get emails from people who do not know. There is also data by poverty by state, which we have reported on in the past and will update/continue to report on.
What may be the dream goal in life (at least financially) is that if your income puts you in the top 1% for the higher priced parts of the country (say the Northeastern states or places on the west coast) but you live in a different part, more affordable of the country. When someone is to hit this goal, your income will go incredibly far. I am a huge believer in this concept and I can attest to its validity and benefits. Or even if you have an income at “only” the median national average but you live in a less expensive part of the country.
Income by state
As we talk about, like most things in life, certain sources of data may vary slightly as to how calculations are done. That being said, for this report/source, The Economic Policy Institute shows that the average needed to be in the top one percent by income is $421,926. This is nationally median level. The break-up by state is as follows.
District of Columbia: $598,155
New Jersey: $588,575
New York: $550,174
North Dakota: $445,415
South Dakota: $407,406
New Hampshire: $405,286
Rhode Island: $346,657
North Carolina: $343,066
South Carolina: $318,463
West Virginia: $258,078
New Mexico: $255,429