For many, a six figure salary represents the ultimate income goal.
In 2019, 34.1% of US Households made at least 6 figures a year – well beyond the median household income of $68,703.
So today, we are going to dive into the data in order to answer 4 questions:
- What is a 6 figure salary?
- How does a 6 figure salary break down by state?
- What jobs pay 6 figures?
- How can we build wealth without a 6 figure salary?
What is a 6 Figure Salary?
When looking at salary, the amount of figures is determined by counting how many numbers are to the left of the decimal place.
As an example, a salary of $54,000.00 would a 5 figure salary.
Therefore, we can define a 6 figure salary as any salary between $100,000.00 – $999,999.99
How does a 6 Figure Salary Break Down by State?
While a 6 figure salary sounds great, how much would we be actually bringing home?
To answer that question, I used ADP’s Salary Paycheck Calculator to break down what a $100,000 gross annual salary (bottom limit for a 6 figure salary) looks like by month, bi-weekly & hourly.
When looking at the below table, keep in mind the following assumptions:
- This assumes that someone is filing their taxes as an individual
- This does not include any local or county taxes
- This does not account for any income deductions (i.e. retirement accounts, health insurance, etc.)
- This assumes you are not exempt from FICA or Medicare
State | Gross Annual Salary | Post Tax Annual Salary | Monthly Pay | Bi-Weekly Pay | Hourly Pay |
---|---|---|---|---|---|
Alabama | $100,000.00 | $71,345.56 | $5,488.12 | $2,744.06 | $34.30 |
Alaska | $100,000.00 | $74,777.04 | $5,752.08 | $2,876.04 | $35.95 |
Arizona | $100,000.00 | $72,576.92 | $5,582.84 | $2,791.42 | $34.89 |
Arkansas | $100,000.00 | $69,748.90 | $5,365.30 | $2,682.65 | $33.53 |
California | $100,000.00 | $67,476.24 | $5,190.48 | $2,595.24 | $32.44 |
Colorado | $100,000.00 | $70,909.02 | $5,454.54 | $2,727.27 | $34.09 |
Connecticut | $100,000.00 | $67,786.94 | $5,214.38 | $2,607.19 | $32.59 |
Delaware | $100,000.00 | $69,908.02 | $5,377.54 | $2,688.77 | $33.60 |
Florida | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
Georgia | $100,000.00 | $69,963.92 | $5,381.84 | $2,690.92 | $33.63 |
Hawaii | $100,000.00 | $67,668.38 | $5,205.26 | $2,602.63 | $32.53 |
Idaho | $100,000.00 | $69,479.02 | $5,344.54 | $2,672.27 | $33.40 |
Illinois | $100,000.00 | $70,327.14 | $5,409.78 | $2,704.89 | $33.81 |
Indiana | $100,000.00 | $72,047.04 | $5,542.08 | $2,771.04 | $34.69 |
Iowa | $100,000.00 | $70,395.78 | $5,415.06 | $2,707.53 | $33.84 |
Kansas | $100,000.00 | $70,207.02 | $5,400.54 | $2,700.27 | $33.75 |
Kentucky | $100,000.00 | $70,411.64 | $5,416.28 | $2,708.14 | $33.85 |
Louisiana | $100,000.00 | $70,776.94 | $5,444.38 | $2,722.19 | $34.03 |
Maine | $100,000.00 | $69,089.02 | $5,314.54 | $2,657.27 | $33.26 |
Maryland | $100,000.00 | $70,638.62 | $5,433.74 | $2,716.87 | $33.96 |
Massachusetts | $100,000.00 | $70,281.38 | $5,406.26 | $2,703.13 | $33.79 |
Michigan | $100,000.00 | $71,027.06 | $5,463.62 | $2,731.81 | $34.15 |
Minnesota | $100,000.00 | $69,063.02 | $5,312.54 | $2,656.27 | $33.20 |
Mississippi | $100,000.00 | $70,649.02 | $5,434.54 | $2,717.27 | $33.97 |
Missouri | $100,000.00 | $70,753.02 | $5,442.54 | $2,721.27 | $34.02 |
Montana | $100,000.00 | $69,687.02 | $5,360.54 | $2,680.27 | $33.50 |
Nebraska | $100,000.00 | $69,429.10 | $5,340.70 | $2,670.35 | $33.38 |
Nevada | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
New Hampshire | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
New Jersey | $100,000.00 | $71,051.76 | $5,465.52 | $2,732.76 | $34.16 |
New Mexico | $100,000.00 | $70,955.82 | $5,458.14 | $2,729.07 | $34.11 |
New York | $100,000.00 | $69,399.46 | $5,338.42 | $2,669.21 | $33.37 |
North Carolina | $100,000.00 | $70,493.02 | $5,422.54 | $2,711.27 | $33.89 |
North Dakota | $100,000.00 | $73,743.02 | $5,672.54 | $2,836.27 | $35.45 |
Ohio | $100,000.00 | $72,077.72 | $5,544.44 | $2,772.22 | $34.65 |
Oklahoma | $100,000.00 | $70,779.02 | $5,444.54 | $2,722.27 | $34.03 |
Oregon | $100,000.00 | $67,484.04 | $5,191.08 | $2,595.54 | $32.44 |
Pennsylvania | $100,000.00 | $72,146.88 | $5,549.76 | $2,774.88 | $34.69 |
Rhode Island | $100,000.00 | $69,889.04 | $5,376.08 | $2,688.04 | $33.60 |
South Carolina | $100,000.00 | $68,739.84 | $5,287.68 | $2,643.84 | $33.05 |
South Dakota | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
Tennessee | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
Texas | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
Utah | $100,000.00 | $70,327.14 | $5,409.78 | $2,704.89 | $33.81 |
Vermont | $100,000.00 | $70,217.42 | $5,401.34 | $2,700.67 | $33.76 |
Virginia | $100,000.00 | $70,043.22 | $5,387.94 | $2,693.97 | $33.67 |
Washington | $100,000.00 | $75,023.78 | $5,771.06 | $2,885.53 | $36.07 |
West Virginia | $100,000.00 | $69,895.02 | $5,376.54 | $2,688.27 | $33.60 |
Wisconsin | $100,000.00 | $69,301.70 | $5,330.90 | $2,665.45 | $33.32 |
Wyoming | $100,000.00 | $75,277.02 | $5,790.54 | $2,895.27 | $36.19 |
Washington D.C. | $100,000.00 | $68,387.02 | $5,260.54 | $2,630.27 | $32.88 |
Puerto Rico | $100,000.00 | $72,081.88 | $5,544.76 | $2,772.38 | $34.65 |
Here is what stood out to me:
- The state(s) with the highest post tax salary for someone making $100,000 is tied between Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas & Wyoming at $75,277.02.
- The state with the lowest post tax salary for someone making $100,000 is California at $67,476.28.
- The average hourly rate for someone making $100,000 is $34.13.
Jobs That Earn 6 Figure Salaries
What jobs are paying 6 figure salaries?
We can answer that question using data from the Bureau of Labor Statistics.
I also wrote an article going over professions that earn 6 figures without a college degree.
Below is a visualization showing the different jobs whose median earnings are at least 6 figures (hover over bars for more detail):
If you are curious about the educational requirements for these jobs, I recommend checking out the Bureau of Labor Statistics’ Occupational Outlook Handbook.
Building Wealth Without a 6 Figure Salary
Fortunately, the reality is that we don’t need a 6 figure salary in order to become financially independent.
Instead, there are things that we can do today in order to immediately begin building our wealth:
Increasing Our Savings Rate
Our savings rate is the most important metric to track on our path to financial independence
Luckily, it is also a metric that we have considerable control over.
As a result, one of the quickest things that we can do is increasing our savings rate.
This can be done in several different ways:
- Decreasing Our Big 3 Expenses
- Decreasing Our Non-Essential Recurring Expenses
- Automating Our Savings
Becoming Tax Savvy
When calculating how 6 figure salaries broke down by state, I did not include any taxable deductions.
However, there are some quick and easy things that we can do in order to decrease our overall tax burden as well as result in having more money to invest:
- Contributing to a Traditional IRA
- Contributing to a Traditional 401(k)
- Contributing to a Flexible Savings Account (FSA) OR Health Savings Account (HSA)
To see the beneficial impacts of being tax savvy, let’s consider an example:
As a reminder, here is salary breakdown for someone who makes 6 figures in Florida:
State | Gross Annual Salary | Post Tax Annual Salary |
---|---|---|
Florida | $100,000.00 | $75,277.02 |
Leveraging the same assumptions from earlier, this hypothetical individual’s overall federal tax burden (Federal, FICA, Medicare) would be $24,722.98
However, if this individual were to max out their contributions to a traditional IRA, 401(k) and HSA, their overall tax burden would decrease 30% to $17,393.22.
If this individual were to invest the ~$7,300 in tax savings over the next 30 years with a 10% rate of return, they would end with an extra $1.32 Million!
Moving to a Low Cost of Living Area
Even when adjusting for taxes, 6 figure salaries in each state would still not be equivalent.
That is because each state has a different cost of living.
As an example, a 6 figure salary in Hawaii is not equal to a 6 figure salary in Mississippi.
The cost of living in Hawaii is 92% greater than the national average while Mississippi’s cost of living is 13.9% less than the national average. As a result, a 6 figure salary is worth considerable more in Mississippi then in Hawaii.
Therefore moving to a lower cost of living area has the ability to decrease our overall expenses and save more as a result.
Changing Jobs or Negotiating a Raise
Even if we don’t make a 6 figure income, we can still increase our salary.
This can be done by either changing jobs or internally negotiating a raise.
Changing jobs is probably the easiest way to get a raise; with some studies suggesting that employees who stay in companies longer than two years get paid 50% less.
However, if you do not want to switch companies, you can internally negotiate a raise.
While this is harder to pull this off, it can be done.
I recently internally negotiated a 25% raise at my current company that allegedly had a 20% raise cap for internal movements – I called B.S. and negotiated for what I believed I was worth.
Building Passive Income Streams
When it comes to early retirement, developing consistent passive income streams are 25X more effective than having a 6 figure active income.
This is because passive income has two mathematical advantages that completely change the retirement equation.
First, passive income has the ability to scale exponentially.
Because active income is largely a function of time, earnings are limited to the number of hours that you work.
This is in contrast to passive income, where time does not have the same impact on potential earnings.
The second advantage is that earning $1 in passive income is equivalent to saving $25 for retirement.
The idea is that if you have recurring passive income that can cover recurring expenses, this would result in a smaller retirement portfolio needed in order to cover the rest of your living expenses. This is based on the same math behind the 4% rule developed by the trinity study.
Final Thoughts
What does a 6 figure income really get you? Honestly, it depends on a ton of factors.
While making 6 figures is a great goal, we should actively ensure that this does not come at the expense of our time and happiness.
We can always make more money, but we can’t get back our time in this world.
Thank you for reading! 🙂
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One interesting point is that the actual take home pay varies by only a couple of thousand when comparing states. Granted, there are outliers on the high end and low end but on average most people will get $69k – $71k take home regardless fo state. The comparison between Hawaii and Mississippi is a bit flawed. Yes, cost of living is lower in the later but Hawaii is an island so everything will be more expensive.
I was also surprised to see such small variation between most of the states! It’s also interesting to note, all else being equal without deductions, that the most one could earn is around that $75K a year mark!
Regarding the Hawaii vs Mississippi comparison, I understand what you are saying. However, it would be a fair comparison because we are using a cost of living index to compare expenses that are indexed to the U.S. national average. This enables us to make these types of comparisons