What Is a ‘Comfortable Salary’ in the U.S.?

The American Dream, ever heard of it? It’s an age-old belief, one that dictates that by working hard and living as an upright citizen, any American can forge a happy and comfortable life for themselves and their family.

Though Americans have long considered the United States to be a land of opportunity, owning a home and becoming more financially well-off than our parents may be more difficult than previously thought. According to a 2018 study released by New York University professor Michael Hout, workers in the U.S. are much more likely to remain in the same social class as their parents than workers in other countries.

What’s more, the findings come as pay for top executives continues to climb while the average worker wage remains stagnant. A 2017 study from the Economic Policy Institute indicates that CEO compensation rose by 1,070 percent (based on stock options realized) between 1978 and 2017, compared to a painfully slow 11.2 percent growth in the average worker’s compensation over the same period.

So, is the American Dream a myth? Is homeownership an option? How much do you actually need to earn to live comfortably in the U.S.? And what does “living comfortably” mean, anyway?

As it turns out, the answers to these questions aren’t exactly ones we can name outright, especially when considering the many factors that determine how much you make—and how much you need to make. As for what those factors are, let’s start with the basics.

Standard of living

The movement for workers to earn enough to support their basic needs isn’t a new one. Boston ship carpenters came together in 1675 to demand higher pay. As the American Federation of Labor (AFL) took shape in 1886, it promoted the idea of a general “living wage,” which would enable all workers to support a family, participate in public life, and maintain an “American standard of living” higher than the 19th-century European urban working class.

Flash forward to today and you’ll find that the concept of a living wage hasn’t changed much. In essence, it refers to the income level that allows an individual or family to afford an adequate living space, food, and other basic necessities. One goal of a living wage is to allow workers to make enough to maintain their wealth and enjoy the comforts and overall lifestyle they’re accustomed to.

Here’s where “living comfortably” comes into play, a phrase that means different things to different people. For some, it may mean a salary that offers a pathway to paying off debt while not having to stress other financial demands like rent or a mortgage. For others, it might mean a paycheck that makes a luxury purchase possible. Ultimately, a comfortable salary is one that allows you to afford any major expense that may be important to you—whether that be student loans, travel, or box seats—without compromising your savings goals.

Cost of living by location

The cost of living is notoriously high in the U.S, making the ability to cover basic expenses, while still splurging occasionally and contributing to savings, no small feat. When determining the salary or living wage you’ll need to sustain yourself, it’s important to consider the state you live in.

In 2019, GOBankingRates used data from the Bureau of Labor Statistics (BLS) and the 50/30/20 budgeting rule—which allocates 50 percent of your income to necessities, 30 percent to discretionary expenses and 20 percent to savings—to determine the wage you’ll need to live comfortably in each of the 50 states.

The states where a comfortable life is closest within reach stretch across the South. Mississippi is the most affordable, mandating that residents make a median of $58,321 annually to be able to cover their basic expenses and contribute to their savings, all while having some leftover “fun” money.

Hawaii is the single most difficult state for workers to get ahead, mostly due to housing costs that run more than triple the national average at about $36,000 a year—and require Hawaiin workers to pull in a yearly median of $136,437 to enjoy a comfortable life. Other expensive states include California’s median annual living wage of $99,971 followed by New York, with a median of $95,724.

Industry and employer

Workers with similar or even the same job title can expect vastly different wages depending on what industry they’re in. In some cases, it may be a matter of their job functioning within a particular industry or a matter of one type of employer being considerably larger than others.

Take accountants and auditors, for example. According to the BLS, those who work in the insurance and finance industries make a median annual wage of $74,690 compared to a median $68,420 for government accountants and auditors.

It also helps to keep in mind that salary is only one component of your total compensation as a professional. Employee benefits like premium health insurance and 401(k) matching may make lower salaries more comfortable. Perks like tuition assistance and commuter benefits can help as well.

Education level and experience

For most individuals, earning a bachelor’s degree, master’s degree, or higher is the ticket to higher salaries. However, depending on a prospective student’s degree type and desired field, a specific program won’t always guarantee better pay.

When considering graduate programs, in particular, job outlook data is especially helpful to gauge demand in occupations that see an advanced postsecondary degree as a must. For example, a career as a nurse anesthetist currently requires candidates to complete a master’s degree-level nurse anesthesia program. By 2022, they’ll need a DNAP (doctorate of nursing anesthesia practice) or DNP (doctorate of nursing practice) degree to enter the field.

Likewise, job recruiting site Glassdoor reports that professionals starting in the Information Technology (IT) field can expect an average entry-level salary of $64,421. With a master’s degree in areas like computer science or information systems, the average salary jumps to $88,397.

On the other hand, while an advanced degree might help you stand out when applying to a librarian job, it doesn’t necessarily equate with better pay. According to PayScale, the average salary for a professional with a bachelor of science (B.S.) degree in library information science is $55,000 a year. With a master’s degree in the same subject area, that average doesn’t see an improvement.

Your length of experience in your profession is another one of the most stable predictors of salary too. The longer you work, the more you’ll tend to make—that is, until a certain age. A 2011 report from PayScale states that those with a college degree can expect their income to climb sharply through your 20s and continue to rise at a slower rate during their 30. As 40 hits, it’s also typical for professionals to hit a pay ceiling that lasts for the remaining 25 years of their career.

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