Many of us believe that making 6 figures a year is what qualifies an individual for financial freedom. So if you’re currently making $60,000 a year, it’s easy to wonder whether the amount is sufficient. Is 60K a good salary or should you aim for more?
60K may or may not be a good salary. It depends on the current cost of living, your demography, your lifestyle, and the number of people in your household. The $60,000 may be a good income for a single person living in West Virginia, but it won’t be enough for a family residing in Washington DC.
The goal of this post is simple:
We at Financial Creatives want help you understand the conditions under which $60,000 a year is a good salary and when it’s not.
In the end, you should be able to plan your finances accordingly if you’re a professional who earns this much money in 12 months.
Is 60K a Good Salary for You? (4 Factors to Consider)
A study by Policy Advice shows that $60,000 is the median US income as of 2021, with the median weekly earnings being as high as $1,250 for men and women in the 35 and 65 years age bracket.
But just how good enough is 60K as an annual salary in the first place?
Generally, $60,000 is a good salary. With discipline and proper financial planning, you can get by comfortably. At least you can pay rent, buy food, save for retirement, invest in new skills, and leave room for saving.
To be clear, several factors determine whether $60,000 can be enough for you to live on. And they’re a follows:
1. Your Demography
States such as Washington DC and Los Angeles have some of the most beautiful cities in America. So living in such cities would be a dream come true for most, if not all, people.
Unfortunately, LA and DC are some of the most expensive places in the United States of America.
For example, the average monthly rent for a 2-bedroom apartment in DC is $3,500. That sums up to $42,000 in rent for 12 months, which someone who earns $60,000 a year would struggle to cover.
In Alcona and Alger County in Michigan, the average monthly rent for a house of the same size stands at $750. Again, that sums up to $9,000 per year, which is about $33,000 less what you’d pay in DC.
Even the cost of transportation, entertainment, and essential products and services vary based on demography.
The bottom line is this:
Your $60,000 annual income can only be good enough if you live in a state where the cost of living isn’t insanely high.
2. Your State’s Tax Rates
Here’s the deal:
People that earn $60,000 per year don’t bring that money home.
The 60K is your gross income. In other words, $60,000 is the amount of money your employer pays you per year before tax deductions.
You have to pay Social Security tax, Federal Income tax, and Medicare tax. Keep in mind that the tax rate varies from state to state, so it’s unlikely there’s a general chart to look up.
3. The Number of People in Your Household
Another factor that determines whether 60K is a good salary is the number of people in your household.
Are you single? Or, do you have a family looking up to you on a monthly basis?
Depending on your answer to this question, you should be able to determine whether it’s possible to live on an annual salary of $60,000.
4. Your Future Goals
Every goal you set in life requires some money to meet. It doesn’t matter whether they’re long-term or short-term.
Depending on the magnitude of what you’d like to achieve in the future, a $60,000 salary may or may not be enough for you.
For example, if you would like to buy an SUV in six months or less, but you live in an expensive state such as Washington, you’re highly likely to hit rock bottom fast. It’s a different case if you’re from Michigan, as you can save enough money within that period to buy yourself the car.
Is 60K a Good Salary for a Single Person?
60,000 dollars may be a good salary for a single person, provided they don’t reside in the most expensive states in the U.S.
For what it’s worth, you won’t live comfortably on a 60K salary if you reside in Los Angeles or DC. The average monthly rent for a 2-bedroom house alone is $3,500, which can be very difficult to keep up with for the long-term.
However, if you live in affordable states such as Michigan, where the average annual rent for a 2-bedrooom house is $9,000, you can live comfortably on a 60K salary and even save some money for future personal project.
If you’re a single person earning $60,000, your rule of thumb should be to save at least 50% of the income. With $30,000 in savings every 12 months, you can live comfortably without worrying about emergency funds.
60,000 a Year Is How Much an Hour?
Some people argue that you never really know how much you earn unless you know your hourly wage. So check the following table to know how much you earn every hour if you make $60K a year.
Keep in mind that how much you get as your take home pay will vary depending on the tax rate in your state. You’ll earn a net income of $45,000 a year if you’re in the 25% tax bracket and $51,000 a year if you’re in the 15% tax bracket.
As you can see from the table above, the hourly rate for someone earning $60,000 a year is $30, which is far above the rate many people earn in the United States of America.
The current hourly rage in the U.S. is $7.25, so someone getting $30 an hour, without working an overtime, makes more money than most Americans do.
Can You Live on $60,000 a Year?
Many Americans ear $7.25 an hour, and they survive. It’s not that they’re survivalists by nature. Rather, they plan their wages accordingly and live within their means.
If a common American earning a minimum hourly wage can make ends meet, you really should do well with an annual salary of $60,000.
The most important rule of life is to live within your means. That means buying what you can afford, planning, saving money, and never spending money that you don’t have.
Follow these rules and you will do just fine.
Is 60K a Year Middle Class?
Whether a 60K a year salary is middle class depends on a number of factors. These may include:
- Which country you’re in
- The state you live in if you’re an American
- How much tax you have to pay every month
Other factors include your lifestyle, the number of people who look up to you, and the amount of expenses you have to cover every month.
More often than not, a 60K annual salary may be middle class for someone who lives in the United States of America.
While everyone understands the phrase middle class differently, it generally means you have more money to spend than those who earn the minimum hourly wage of $7.25 an hour and less money than those who make more.
With this respect, someone who earns $60,000 a year pre-tax, or at least $51,000 a year after taxation, is an example of a middle class earner in the United States of America.
Is $60,000 a Year Enough for a Family of Four?
If you’re not after extravagant living, $60,000 may be enough for a family of four.
Keep in mind that you’re taking $45,000 or $51,000 home depending on your tax bracket. So you need to have a proper budget plan if your family is to live on that much money.
To be abundantly clear, $51,000 a year may not be enough to cover everything you want, but it should meet the most common family needs and make ends meet.
Your family of four should be okay provided you have a proper budget plan. There are times when you may have to cut on the cost of some items to live within the means of the $60,000 annual gross salary. So it’s important to determine what’s more essential and what’s not then plan accordingly.
Final Words: Is 60K a Good Salary?
Someone making $60K a year doesn’t have a lot to spend compared to someone who earns a salary of $100K. But that doesn’t mean 60K isn’t a good salary.
Remember, your demography, lifestyle, future goals, tax bracket, and the current cost of living in your state are the factor that will determine whether $60,000 is a good salary or otherwise.
If you ask for anyone’s opinion, they’ll make it abundantly clear that you can do really well with a salary of $60K a year if you live in inexpensive states such as Alabama, Georgia, and Kansas. With the average annual housing rate standing at $9,000 at least, you can do really well if you have a budget plan.
You won’t live well on a $60,000 salary in DC, for example. Even if you’re a single person, rent may be a challenge to pay given the current average monthly rate.
The bottom line is:
Plan your budget accordingly and move to a state where you can live within your means.