When you are in your teens and in the process of selecting a career, $60k in annual salary may seem amazing. After all, it’s almost twice your hourly wage if you convert your part-time work into a full-time occupation. As amazing as it may seem right now, you are still wondering, is 60000 a good salary for a grownup?
Once I am managing my finances all by myself, will this money pay my bills?What about other expenses including wardrobe, socialization, and learning?
You may also want to know the exact hours you would want to work in a given month to earn your living expenses. After all, work hard, play hard is the mentality of those people who have no life of their own. You ought to set the right time to cover your expenses and spare some cash to live life on your terms.
Here is the breakdown of your earnings for different intervals.
Let’s start with finding out 60000 a year is how much an hour. We can translate the $60,000 salary to hourly rate of $28.85 ($60,000/2080 hours). It makes a daily wage of $230.77 ($28.85 x 8 hours/day).
You can use the above-mentioned formula to answer your concern, ‘how much do I make an hour’.
For a week, the salary becomes $1,153.85 ($230.77 x 5 days/week).
When we consider two weeks of paid work leave, we can convert the annual salary to hourly $30 rate ($60,000 / 2000 hours). And the daily compensation becomes $240 ($30 x 8 hours). In this scenario, weekly pay becomes $1200 ($60,000 / 50 weeks).
If you want to consider the monthly income, it will be $5000/ month ($60,000 / 12 months).
The figures calculated above represent gross pay. Usually, employees also have to pay income tax before they can take their salary home.
Given the versatility in an individual tax situation, we cannot foresee actual tax liability that arises for a person in a given year. If we assume that you would pay Federal tax at 11%, your state tax amounts to 5%, and you make social security payment of 7%, we can calculate the following yearly taxes on an income of $60,000:
- Federal tax of 11% = $6,600
- State tax of 5% = $3,000
- Social Security of 7% = $4,200
- Take-home pay = $46,200
Accordingly, your hourly net salary is $22.21 considering you get no paid leave and $23.10 if your annual paid leave is two weeks long.
You may get a surge in your net income if you live in a state that doesn’t tax wages. A few of such states include New Hampshire, Texas Washington, Florida, Alaska, and Tennessee.
Is 65k A Good Salary?
$65k is obviously a better salary than $60k but if we look at it from the viewpoint of living expenses, we will find a great salary package for a person in most states and most financial situations.
By the way, if you want to know 65000 a year is how much an hour, you can use the same formula we mentioned above to calculate the hourly rate.
When assessing the salary standard, we shouldn’t forget that although some professions pay higher salaries, they also require the executive to maintain a lifestyle that consumes more resources. One example of such a career is in the financial industry where the market analyst has to present a sophisticated persona and build relationships with their clients.
Hospitality and travel are other such industries that require lifestyle upgrades from the employees.
Comparison Against Median And Average Salaries
Let’s get back to the question, ‘Is 60000 a good salary?’
Although there can be some exceptions, usually $60,000 makes a worthwhile salary for Americans. The average salary of an American is $53,490 per year for 2021. So, if you are earning $60,000, you are making 5 figures a year slightly more than an average fellow citizen.
Is 60k A Year Middle Class?
How would you fare if you end up earning $60k a year? Would you become super-rich? Would living become comfortable for you?
For starters, you will lie in the middle class with a yearly income of $60,000. Every household that collectively earns between $25k and $100k is considered in the middle class. So, if you are a sole earner in your home, your $60k annual salary will place you in this class
However, things might change if your household brings two incomes and collectively earns more than $100,000. In that case, your home will shift into the upper-middle class.
Can We Live Comfortably At $60k?
In most cases, this question will get a positive answer. Yes, you can live comfortably with $60k. Again, there are some exceptional cases to be considered here.
States Where 60k Is A Good Salary
Your expenditure changes with your area of residence. Even within a city, you might see a variation in the cost of living from one area to another. Sometimes this difference comes only from rental costs or mortgage payments. But in some cases, the costs of different items also change with the area.
This impact only increases when you change the city or state. Some states have a lower cost of living than the national average. Mississippi is one such state. This state costs 15% lower in terms of living expenses than the average of all states in the United States of America.
Alabama, Oklahoma, Kansas, and Arkansas are other states that are cheaper to live in than the rest of America.
At the same time, some states cost a lot when you start living there. Don’t expect your $60k to last even half a year if you are living in New York or Hawaii. Things get better as move towards Alaska, Connecticut, and New Jersey.
Maine, Illinois, and Delaware are cheaper options to reside in but steer clear of Massachusetts, Maryland, and Washington if you can.
If you are going for New York or Hawaii, be ready to pay upward of $3 for every gallon of milk. And don’t forget the home prices that go above the million-dollar mark.
Double Income Families
Another factor that determines if $60k is enough for a person, relates to one’s relationship status as well as the partner’s income. If you plan for a two-income family, your partner’s income will surely support your income and may pull you out of the middle class into the upper-middle class. Even if your partner’s income is not high enough – or he/ she works only part-time – your comfort level will surely elevate.
If you are living alone, you may see fewer opportunities to share your burden. Some expenses that you will pay double in this case include rent and utility bills. We cannot say that even after taking sole responsibility for your household’s finances, you will still not live comfortably on your $60k salary but the potential for savings and entertainment will surely drop.
Another scenario arises when you are in a relationship but your partner is unemployed. If you have chosen to take financial care of your partner also, this may make your situation a bit uncomfortable – especially when kids are in the picture.
As a rule of thumb, as the number of dependents increases, the standard of living with this income range decreases.
Cost of Raising Children
Children demand separate mention in the list of dependents only because of their unique needs. First off, they require constant surveillance that requires you to pay for babysitting or daycare services. For most families, this caring arrangement consumes a big portion of their budget.
In two-income families, this cost takes up almost 10% of the total household budget. And here we only discussed daycare costs spent on a single child! With every other child, add 10% more on top of it.
The single-income households face even tougher times – in the case of the absence of a stay-at-home parent. Make the childcare cost around 15% of their budget. And daycare is just one cost that relates to raising children. Others include their educational expenses, entertainment, and nurturing. Each of these categories takes a big chunk out of parents’ pockets. Expenditure on Children by Families (2015) is the most recent report presented by the United States Department of Agriculture. It claims that families spend around $233,610 on a child from birth to 17 years of age.
If we convert this lifetime figure into a yearly amount, we get an expense of more than $13,000 a year. Multiply this number with the number of children a family has to get the total income it spends on raising children.
For most people, $60,000 makes the right income bracket even in the presence of children. But personal choices may determine its suitability for you. You may want to live a rich lifestyle or you may want to work fewer hours in a given year.
Retirement choices also determine the income you want to target in your working years. With $60000 in earned income every year, the chances of saving – and, in turn, investing – will decline considerably, especially if you have a family.
With a family in tow, you could hardly spare $5000 to $8000 a year with a $60k pa salary. In other words, your retirement fund will need decades to grow and you can only retire after your 60th birthday.
Note that this calculation is only valid when $60k is your starting salary. If you achieve this rate at the later stage of your career, things will look even gloomier.
In short, $60,000 is not a good salary if you have a family and you want to retire early. You can, however, retire comfortably if you are single with this much amount in your earned yearly income.
Also, take note of the lifestyle you want to pursue after retirement. Retirement is a financially taxing time as it may include additional responsibilities of managing healthcare costs. Plus, uncertainty around inflation and conditions of the financial market increases as we go farther into the future. Combine this with some vacations you may want to enjoy once retired and you may have to build up a fortune for an easy retirement.
Even a comfortable retirement plan with only a small buffer against an emergency can mean more than a million dollars in funds for a single person. If you are planning an early retirement, costs will go far up. Considering all these factors, $60,000 is not a great income level to plan early retirement without jeopardizing your current living situation.
Different people have different financial needs. While for most Americans, $60,000 is a good enough salary to live a comfortable life, some households may not function very well with this income.
Excessively lavish spending may make one factor that would easily demolish the budget. A chronic illness is another. Some illnesses may not subject the patient to a heavy financial burden. These include arthritis, obesity, and most allergies. Other chronic illnesses can take a toll on one’s finances easily. Some examples of these costly illnesses include diabetes, cancer, and heart problems.
$60k may also not suffice those households which are supporting a family member with a terminal illness, disability, or costly chronic illness. The reasons are unsurprising. Even in the presence of social security funds, the costs of taking care of the sick strain the budget.
Which Careers Offer $60k In Annual Salary?
Although some careers offer a commendable starting salary, mostly, the salary of a person takes influence from more factors than just career choice. Before we define the factors that take-home-salary of an executive, let’s consider these jobs that pay upward of $60000 in annual pay.
- Electrical engineer
- Staff nurse
- Actuary I
- Project manager
- Civil engineer
- Digital design engineer, and Data architecture are a few such careers.
“Note that this list is not exclusive and you may find other careers with similar entry-level salaries”
Now let’s consider those factors that determine the actual salary of a person irrespective of the average salary of the occupation he has chosen. The first factor that influences salary is a person’s area of residence.
While some states in America are cheaper for living, you will notice that these are the same states that offer lower wages than other states. (However, you will find yourself better-off in these localities because the advantage of lower cost of living outweighs the opportunity cost of lower salary.)
Specialized skill is another factor that affects the bargaining power of the candidate and, in turn, determines the salary one would get from the job. Negotiation power – or negotiation skills – also has its own role in determining the pay structure.
For those careers where pay is not very lucrative, people can still earn $60k a year.
However, they may have to work hard for years before they can get to that place. Managers, teachers, firefighters, and some technicians can advance to this level after gaining experience and moving up the organizational hierarchy.
$60000 per year salary may seem lucrative to a student who will soon embark on college. But is it really that lucrative? How will it work out with increasing financial responsibilities that arise in later years of life?
How about changing your state? Would you still consider this income lucrative if you were living in Alaska? How would you fare if this was your salary in Connecticut?
The financial benefits of living with a partner versus living alone are no secret. But how will the situation change when children come into the picture? Think of costs that are additional to basic living expenses. You may want to take vacations once in a while. You, or your partner or child, can get sick. Life happens. How will this income play out in different situations?
Retirement makes another big expense that needs special care. Will your $60k stretch enough to allow saving for retirement? If you can spare some cash, how much is it? Is it enough to meet your goals of an early or comfortable retirement?
If you’re asking, ‘Is 60000 a good salary’ from the perspective of a single person, know
that it’s not only comfortable but also very lucrative. But it changes when you start your family and settle down.