Visualizing American Income Levels by Age Group
There are two commonly held beliefs around income and age:
1) Earning trajectory is largely determined by the time a person is 35-years-old
2) Income is positively correlated with age
How do these beliefs stand up to the actual income data? As it turns out, quite well.
Today’s data, from the IPUMS.org Current Population Survey, is a detailed look at income by age group.
The $50K Threshold
In the age of LinkedIn bragging it’s no surprise that two-thirds of people who are being paid the market rate believe they’re actually underpaid.
For people just starting out in the workforce, there can be a lot of pressure to earn a higher salary, but as the data shows, only a tiny percentage of workers under the age of 25 surpass a salary of $50K.
The majority of people in the work force make their greatest income strides between the ages of 30 and 35, with median income jumping by 26% during that short time-frame.
After the age of 35, the percentage of people earning $50K or more is surprisingly consistent until retirement age, hovering between 42% and 48%.
The $100K Threshold
Making $100K per year won’t put you in the top 1% – you’ll need to earn $300K to join that club – however, it’s still enough to live comfortably in most places in America.
Approximately 21 million people in the U.S. workforce earn over $100K. Here’s how they break down by age.
Interestingly, the percentage of Americans earning $100K or more jumps from 2% to 12%, and moves very little after that. Put another way, it’s rare for anyone in their 20s to earn over $100K, but many people who hit that threshold do so by the time they turn 40.
Much like those earning $50K or more, the percentage of $100K+ earners stays fairly consistent until retirement, peaking at age 66.
Individual salary situations will vary widely, of course, but it’s interesting to zoom out at the big picture of income in America.
Mapped: What You Need to Earn to Own a Home in 50 American Cities
What does it take to own a home in the U.S. in 2023? Here’s a look at the salary needed for home ownership in the top 50 metro areas.
What You Need to Earn to Own a Home in 50 American Cities
Once a fundamental part of the American dream, the ability to own a home is drifting farther and farther away for many Americans.
Between skyrocketing prices, stagnating wages, and now rising interest rates, the deck seems to be increasingly stacked against home ownership.
Using May 2023 data tabulated by Home Sweet Home, we map out the annual salary needed to afford a 30-year mortgage (at 6.37%) to buy a home in America’s 50 most populous metropolitan areas.
The monthly minimum mortgage payment includes taxes and insurance as well, and is capped at roughly one-third of the income. This analysis also assumes that the homeowner will put down a 20% down payment.
The Least and Most Affordable American Cities to Own a Home
At the top of the list, and at the very west of the country, San Jose is the least affordable city to own a home for the average American.
One would have to earn at least $374,000 a year to afford a $1.6 million dollar home in the city.
To put those numbers into perspective, the median American annual income is $75,000, about one-fifth what’s required to buy a home in San Jose.
Here’s a look at the annual earnings needed to afford a home in all 50 largest cities in the U.S., ranked from least to most affordable.
|Rank||Metro Area||State||Median Home Price||Annual Salary|
|7||New York City||New York||$577,300||$160,233|
|15||Salt Lake City||Utah||$522,700||$122,717|
Other Californian cities, San Francisco (ranked 2nd), San Diego (3rd), and Los Angeles (4th) all require an annual income of at least $180,000 to attempt home ownership within their metropolitan boundaries.
Boston (ranked 6th) and New York (ranked 7th) represent unaffordability on the East Coast, both requiring at least $160,000 a year to buy homes there.
It’s not just the coasts that are expensive however. To buy a home in Denver (ranked 8th) and Salt Lake City (15th) means earning more than $120,000 a year.
However, cities in the Midwest and South, like Pittsburgh, Detroit, Oklahoma City, and Louisville, are far more affordable, requiring less than $63,000 a year to buy a home.
Interest Rates Rock Home Ownership Chances
Aside from the obvious price differences in housing markets, a key factor that has elevated income requirements across the board is the rapid rise in interest rates in the last year. In fact the average 30-year mortgage has pushed past 7%, the highest it’s been since the 2000s.
This means that while the median price of a house in San Jose has actually come down between 2022 and 2023, the minimum monthly payment has increased from $7,717 to $8,720 this year.
|Rank||Metro Area||State||Median Home Price||Monthly Payment|
|7||New York City||New York||$577,300||$3,739|
|15||Salt Lake City||Utah||$522,700||$2,863|
So to afford a median-priced home in the country, an American needs to earn closer to $100,000 a year, up from $75,500 in 2022. And even then, they would be priced out of owning a home in nearly half of the 50 largest cities in the country.
As a result Americans may yet further delay home ownership. Renting is now a far more attractive option, thanks to the biggest difference between rent and mortgages in over 50 years.
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