How much money it takes to be 'rich' in Minnesota for 2024
Minneapolis skyline. (FOX 9)
(FOX 9) - The definition of "rich" can vary dramatically depending on where you live in the United States. Cost of living, local economies, and tax structures all play a role in how much income is needed to be considered wealthy.
A recent study by GOBankingRates, a platform focused on personal finance, examined the income thresholds required to be considered wealthy across the United States.
Utilizing IRS data, the analysis detailed the earnings needed to rank within the top 20% and top 5% of earners in each state. This research offers valuable insights into the varying definitions of wealth in different regions, highlighting the income disparities that define financial success across America.
How much is needed to be a top earner in Minnesota?
Minnesota is ranked No. 13 in the study. The minimum a Minnesotan would need to make to be in the top 20% of earners would be $145,571, with the average adjusted gross income of the top 20% being $250,361.
The minimum one would need to make in Minnesota to be in the top 5% would be $441,274.
How much is needed to be a top earner in Wisconsin?
In Wisconsin, residents need to earn less than Minnesotans to be in the top 20% of earners. Ranking at No. 26 in the study, Wisconsin residents would need to make a minimum of $124,665 to be in the top 20%.
The average adjusted gross income of the top 20% of earners is $211,049. The minimum you would need to make to be in the top 5% is $372,110.
The highs and lows of wealth in America
New Jersey stands out with the highest threshold for the top 20% of earners. An individual in New Jersey must make at least $180,558 annually to be considered in this upper tier. This reflects the state's high cost of living and affluent communities, particularly those near New York City.
On the other end of the spectrum, Mississippi requires the least income to be among the top 20%, with $101,447 needed annually. Mississippi's lower cost of living and economic structure contribute to a lower threshold for being considered rich than other states.
Income disparities in the West Coast and Northeast
Being in the top 20% of earners in California means making at least $171,387 a year.
The Golden State, known for its pricey real estate and high cost of living, particularly in cities like San Francisco and Los Angeles, demands a substantial income to be considered wealthy.
New York and Massachusetts also require significant incomes to join just the top 20%.
It's $158,336 in New York, while in Massachusetts, one would need $179,470. These states are known for their high living costs, especially in urban areas like New York City and Boston.
Income trends in the Southern states
In the South, Tennessee and Florida present interesting figures.
In Tennessee, an income of $115,174 is necessary to be in the top 20%, while Florida's threshold is slightly higher at $122,779.
These numbers reflect the growing economies and increasing attractiveness of southern states for businesses and retirees, pushing incomes upward.
What's the cutoff for being considered wealthy?
According to the personal finance site SmartAsset, the definition of wealth can vary widely. For example, individuals with $1 million in liquid assets are generally classified as having a high net worth. To be considered very high net worth, one might need assets ranging from $5 million to $10 million, while an ultra-high net worth status could require $30 million or more. These figures underscore the subjective nature of financial classifications across different thresholds of wealth.
The amount you need to earn to be considered wealthy also varies depending on the metrics used. According to IRS standards, a monthly income of approximately $45,000 qualifies someone as wealthy. However, if you're aiming for the top 1% as measured by the Economic Policy Institute (EPI), you'd need to earn about $68,277 monthly.
According to data from the Census Bureau, the median household income in the U.S. is approximately $71,000. To reach the top 20% of earners, an individual would need to earn nearly double this amount, averaging around $130,545 per year.
The threshold for being in the top 5% of earners highlights even more stark contrasts. For example, in Connecticut, you'd need to make $602,707 to be in this elite group, the highest among all states. This is due to Connecticut's concentration of high-income jobs and proximity to New York's financial industries.
Moreover, how one is considered wealthy can vary significantly from state to state, reflecting the diverse economic landscapes and cost of living. For instance, while an income of around $101,447 places you in the top 20% in Mississippi, you would need almost $180,558 to achieve the same status in New Jersey. These disparities illustrate that the financial benchmark for wealth is deeply influenced by regional economic conditions.