What is Considered a High Earner?

Written by mwealthgroup
Published on April 11, 2024

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Are you wondering if you’re a high earner?

Most people think you’re automatically in the big leagues for earning if your salary has six digits. 

But is this the case with inflation, the pandemic aftermath, and taxes?

This article is about determining whether you're in the high earners club. We'll keep it simple, sharing insights and tips to help you see where you stand financially. 

Let’s get to the bottom of what being a “high earner” really means.

The Definition of a High Earner

what is considered a high earner

So, what is considered a high earner?Generally, a high earner earns an annual income between $100,000 and $500,000, placing them among the top 5-15% of income earners in the United States. 

However, the definition goes beyond your paycheck amount. Once you factor in the cost of living, age and career stage, accumulated wealth versus income levels, and lifestyle factors...a high earner might not have much left over.

Ultimately, making it to the high-earner club means you're doing fairly well. But don't forget, it doesn't automatically mean a person is considered rich or actively building wealth.

Are you interested in building wealth? CLICK HERE to learn how to kickstart your wealth.

Income Ranges for High-Earners

The recent "Income in the United States: 2022" report published by the U.S. Census Bureau outlined detailed income brackets for American households, providing a comprehensive look into the economic standing of various population segments. 

Let’s look at the current income ranges and earning levels divided by income classes for the United States.

From Middle to Upper Class - Which Are You?

  • Middle-Class Earners: The heart of America's workforce, those in the middle-income range have household incomes from $58,021 to $94,000. 
  • Upper-Middle Class Earners: Households earning between $94,001 and $153,000 represent the upper-middle class.
  • Upper-Class Earners: The upper class is the apex of the “high earner” income ranges, starting at an average income of $153,001 and beyond, with the top 5% earning $295,001 or more. 

For a more detailed exploration of these income ranges and their implications on American households, refer to the "Income in the United States: 2022" report by the U.S. Census Bureau.

Where You Live Dictates if You’re a High Earner or Not

Where you live in the US determines whether your paycheck makes you a high roller or just getting by. It's kind of wild when you think about it. A six-figure salary that seems like a dream in one town might barely allow you to get by in a big city.

Take someone making $100,000, for example. In a smaller Midwestern city, that paycheck could make you feel like upper-middle-class royalty—big house, couple of cars, money for vacations and savings - the whole nine yards.

But try living on that same 100 grand in Manhattan? You'd be budgeting down to the penny for a small apartment and basics, with little to nothing left over.

It's not just housing costs, either. Everything adds up differently—groceries, utilities, childcare, and getting around. So, the bar for what qualifies as a "high earner" gets pushed way up in those pricey metro areas. 

The takeaway is that evaluating your income has to factor in the local cost of living. Being a high earner is relative to where you live. 

Am I a High Income Earner?- Assess Your Situation

couple discusses if they're high earners

Are you wondering if you're a high-income earner? It's not just a matter of checking your salary against a benchmark. 

To get a grip on your financial standing, you've got to consider the whole picture. Let's break it down:

  1. Annual Income: Sure, this is the headline number. But remember, it's just the starting point. How does your salary stack up after taxes? How does it compare not just nationally but also in your specific area? Based on your earnings, you can look up if you’re considered part of the “upper class” with this calculator.
  2. Cost of Living: This one is big. Your dollar will stretch differently depending on whether you're in downtown San Francisco or suburban Ohio. The cost of living includes the average cost of housing, utilities, grocery items, transportation, and health care. View this cost of living index to see where your state ranks.
  3. Expenses: Look hard at where your money goes every month. Are you spending too much on essentials or splurging on luxuries? Knowing where your money goes is key to understanding your financial health.
  4. Savings: It's not just about what you earn but what you keep. Are you able to reserve money for the future? Your savings rate can tell you a lot about your financial stability.
  5. Investments: Besides saving money, wise investments can significantly impact wealth accumulation. Do you have investments, and how are they performing? Good investments can make a big difference in your financial growth and ability to build wealth as a high earner.
  6. Net Worth: Your net worth (what you own minus what you owe) gives you the clearest picture of where you stand. It factors everything from your home equity to your retirement accounts and debts.

By taking a holistic view of your finances—beyond your annual income—you can better assess whether you're a high-income earner. 

More importantly, you can understand if you're on the right track to accumulating wealth, not just income. 

Remember, being a high earner is great, but being strategic with your money? That's where the real magic happens. Otherwise, you may end up a HENRY…

What is a HENRY? (High Earner, Not Rich Yet)

In the world of personal finance, there's a term that describes a subset of high earners - the "HENRYs" or "High Earners, Not Rich Yet." 

These individuals bring in about $100,000 to $500,000 annually in household income. 

However, the HENRY moniker points out that for many, their high salaries don't always translate directly into accumulating significant wealth. Despite their sizable paychecks, HENRYs often live paycheck-to-paycheck and have minimal savings.

This phenomenon highlights an important distinction—high income does not automatically equal to being rich. It reminds us of the role of financial management in building wealth over time rather than just earning a great living.

What is Lifestyle Creep?

spending too much, no income left over

HENRYs are notorious for lifestyle creep when you start spending more as you earn more, especially on things you don't need. It's like slowly turning up the heat without noticing you're getting cooked! 

A fancier car, a bigger house, and expensive nights out may seem harmless at first, but before you know it, all that extra cash that could have gone into savings or investments disappears.

The Difference: Being a High Earner and Being Considered Rich

There’s a difference between being a high earner and being considered rich. 

Being a high earner means your household income puts you at the top of your area's income brackets. The exact number differs by location, but high earners are above the median income.

On the other hand, being rich is about accumulating significant wealth and assets over time. The rich have sizable investment portfolios, real estate, business equity, and more, which add to their high net worth annually.

You can be a high earner without being rich yet. But you can also be rich without the absolute highest income. A retired couple living off invested wealth from a successful business may not have a huge annual income but are still considered rich.

The dividing line is income versus net worth. High earners make a great living, but real wealth is total assets accumulated over time. One can lead to the other, but they're not automatically interchangeable. All in all - high income alone doesn't make you rich.

How High-Income Earners Build Wealth

how to create wealth

Building wealth is not solely about making more money or the size of your paycheck; it’s about how effectively it is used.

Here’s how to start building wealth as a high-earner:

  1. Start Planning Early: Begin financial planning and save money to invest as soon as possible to take advantage of compound interest.
  2. Assess Financial Health: Evaluate your current financial situation, including cash flow, debt levels, emergency funds, and invest in whole life insurance.
  3. Personalize Investment Strategies: Customize your investment choices to fit your risk tolerance, interests, and financial goals.
  4. Develop Multiple Income Streams: Focus on creating and optimizing one passive income source before exploring additional ones.
  5. Adapt: Be prepared to adjust financial strategies in response to market dynamics, economic policies, and personal life changes.
  6. Pursue Financial Education: Continuously educate yourself about financial management, investment opportunities, and economic trends.
  7. Seek Expert Advice: Collaborate with a financial advisor for customized financial planning and investment strategies tailored to your needs.

Adopting these strategies can help high earners grow their wealth and guarantee it supports their desired lifestyle and long-term goals.

The Bottom Line About High Earning

Being a high earner is not solely about income figures; it's about managing that income, your lifestyle, and your ability to accumulate wealth over time. 

There is no universal threshold for being a high earner. It is deeply subjective and influenced by various factors, including personal aspirations, geographic location, and financial literacy.

By evaluating your financial situation holistically, you can better understand where you stand and what steps you might need to take to ensure your financial well-being and security. Whether through budgeting, investing, or planning for the future, the path to becoming not just a high-earner but also financially affluent is within reach for those who are mindful of their financial habits and goals.

Working with a financial advisor is important for high earners to evaluate their standing, including financial planning, retirement savings, tax liability, and financial future.

Contact M Wealth Group to schedule your free introductory call. We look forward to helping you build wealth as a high-earner!

FAQs About High Earners

What salary is considered a “high earner”?

A high earner typically earns an annual income ranging from $100,000 to $500,000, among the top 5-15% of income earners in the United States. However, factors such as geographic location, cost of living, and personal financial goals also play significant roles in defining a high earner.

What income is upper class?

The upper class is generally defined by households earning $153,001 or more annually, as per the "Income in the United States: 2022" report by the U.S. Census Bureau. Within this bracket, the top 5% of households, earning $295,001 or more, represent the highest income earners.

What is upper middle class salary?

Households earning between $94,001 and $153,000 annually fall into the upper-middle class category. This income range signifies financial comfort, allowing for higher savings, better lifestyle choices, and more significant investments than the median household.

What is the average American salary?

While the average American salary can vary widely based on occupation, location, and experience, the U.S. Census Bureau reported the median household income in 2022 at $74,580. 

How many people earn over 200k?

The exact number of people earning over $200,000 can fluctuate annually and is influenced by economic conditions, employment rates, and industry growth. However, according to Statista, the number of households earning over $200K is approximately 15 million.

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M Wealth Group
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