How Much Do The Top 5% & 1% Earn In The US?

Matt | Personal Finance

How Much Do The Top 5% & 1% Earn In The US? #earnings #income #salary #pay #personalfinance #moneytips  In this Short, we look at recent IRS data on income and salary figures to reveal how much the top 5% and top 1% are earning across the US. The data tells us an interesting story about age, sector and location based earnings.

Transcript

00:00According to the U.S. Bureau of Labor Statistics, the annual median income for employed people in

00:05the U.S. is now around $59,000. But how does that compare to the top 5% and the top 1%?

00:12Well, Smart Assets has done some helpful analysis of IRS data this year in 2024,

00:17and it revealed to get into the top 5%, you would need to have an annual income of over $290,000.

00:23And to get into the top 1% of earners, you would need to have an annual income of over $787,000.

00:31That's around a 20% increase from last year, according to Smart Assets.

00:35One thing to note is that these figures are based on data for across the U.S.

00:40However, the thresholds to get into the top 5% and the top 1% varies by state.

00:45For example, Connecticut has the highest threshold to reach to be in the top 1% at over $1.15 million.

00:52And California residents are not far behind, needing just over $1 million to be considered in the top 1% of earners for their state.

01:01By comparison, to be in the top 1% of earners for states such as West Virginia and Mississippi,

01:07it requires an annual income of over $420,000 and $440,000 respectively.

01:13If you want to see the income data for your state, you can see this on Smart Assets' website.

01:18Post the COVID pandemic, we've seen wage increases driven up over the last couple of years,

01:23along with inflation and the cost of goods going up too.

01:26However, according to the U.S. Bureau of Labor Statistics, over the last 12 months,

01:31wages have increased on average by 4% to 5% across private sector jobs and also local and state government jobs,

01:38which is quite a lot lower than the 20% increase for the top 1% of earners.

01:43So one thing this data definitely shows us is that it's getting harder to get into the top earning categories.

01:48If you want to try to improve your earnings, to move into a higher earnings category,

01:53and importantly, to allow you to save and invest more money,

01:56then there are a few ways that you can do this.

01:58In my view, the number one thing is to focus on building your skills and increasing your value on the job market,

02:04either to be able to negotiate a higher salary or to be able to find a higher paying job.

02:09For example, if you're currently a waiter in a restaurant and you manage to save up $500

02:14and you take that money and you pay for a sales course,

02:17which enables you to get a sales job paying you more money,

02:21if you're then able to add the ability to do marketing on top while you're doing your sales job,

02:26then you're now able to run an ad campaign, get customer leads in and close sales.

02:31Your earning potential has just gone up tenfold compared to the pay you were getting as a waiter.

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