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What It Takes to Be Among the Top 5% Earners in Your State

The income disparity in the United States has long been a hot-button issue, sparking debates and discussions about economic equality and opportunity. A new analysis provides fresh insights into just how wide this gap is, particularly between the average earners and those in the top echelons of income across different states.

A Glimpse into the Financial Elite

According to a detailed report by WalletHub, there is a staggering difference between what it takes to be considered among the top 5% of earners in various states compared to the national average income of $74,600, as reported by the Federal Reserve. In states like New York, which tops the list, an individual needs to make approximately $553,000 annually to be in the top 5%—a figure that dwarfs the earnings of the median U.S. salary earner.

Check out what you need to make in your state:

RankStateAverage Annual Income of Top 5%Median Annual IncomeAverage Annual Income of Bottom 20%
1New York$553,436$91,366$13,301
2Connecticut$518,757$114,156$14,576
3Virginia$518,296$89,393$18,694
4New Jersey$505,621$117,847$16,445
5Illinois$504,800$78,304$16,192
6Georgia$487,870$66,612$16,472
7Texas$481,483$70,513$16,802
8Washington$474,067$103,748$18,223
9Florida$470,308$68,818$15,375
10Massachusetts$466,208$127,760$13,689
11Minnesota$464,981$86,364$19,797
12Colorado$456,603$97,301$18,451
13California$454,829$123,988$13,949
14Tennessee$453,539$59,077$15,679
15District of Columbia$450,892$162,265$9,011
16North Carolina$450,592$63,025$15,836
17Utah$448,195$89,786$22,491
18Michigan$446,114$62,446$17,019
19Missouri$446,069$59,715$16,821
20Pennsylvania$445,261$74,711$15,801
21Ohio$436,922$61,904$16,188
22Maryland$427,135$124,693$16,647
23Arizona$424,913$74,375$16,604
24Kansas$423,517$68,489$17,176
25Nebraska$416,325$72,384$17,380
26Arkansas$416,224$51,032$14,069
27South Carolina$412,771$62,909$13,996
28Kentucky$411,897$55,629$13,800
29Oklahoma$405,113$57,215$15,205
30Idaho$403,737$70,041$18,372
31Delaware$402,989$87,173$16,930
32Wisconsin$402,256$72,602$17,973
33Nevada$401,062$80,366$14,472
34New Hampshire$400,343$110,205$18,075
35Indiana$399,270$64,170$16,670
36Alabama$398,584$55,480$13,242
37Montana$395,720$68,937$15,337
38Louisiana$395,155$56,282$11,504
39Iowa$395,093$68,974$17,621
40South Dakota$393,809$69,266$17,252
41North Dakota$387,548$79,874$15,661
42Wyoming$387,280$76,307$16,199
43Oregon$377,399$91,100$14,720
44Mississippi$377,040$46,880$12,168
45Rhode Island$353,721$104,252$12,668
46New Mexico$351,972$58,911$11,944
47West Virginia$345,239$52,719$12,477
48Maine$338,866$79,800$13,749
49Vermont$334,470$89,695$14,477
50Hawaii$334,369$141,832$14,014
51Alaska$321,634$113,934$15,646

(Credit: WalletHub)

The High-Income States

The disparity doesn’t end in New York. In Connecticut and Virginia, the average income for the top 5% stands at about $518,000, closely followed by New Jersey and Illinois, where the top earners make around $505,000 annually. These numbers not only illustrate the vast differences in income within these states but also highlight the challenge faced by average earners trying to bridge this substantial financial gap.

The Other End of the Spectrum

Conversely, the state with the lowest threshold for entering the top 5% is Alaska, where an income of roughly $321,000 is sufficient. Hawaii and Vermont are not far behind, with the top 5% earners making about $334,000 annually. This illustrates that while disparity exists nationwide, the scale and impact vary significantly by region.

Median Income and Economic Disparity

Washington D.C. boasts the highest median income at $162,265 but also features the lowest earnings for the bottom 20%, making only $9,011 annually. This stark contrast within the capital highlights the broader issue of income inequality—a problem that is more pronounced in regions with high median incomes. Other states with high median incomes include Hawaii, Massachusetts, Maryland, and California, each illustrating varying degrees of income disparity.

Bridging the Gap

Reaching the top 5% of earners is no small feat and involves several critical factors. Financial experts suggest that a steady increase in income, whether through career advancement, savvy investing, or both, is crucial. Having a robust investment strategy that yields positive returns and ensuring a diversified portfolio can also play a significant role in climbing the economic ladder.

Prioritizing Financial Stability

Moreover, prioritizing long-term financial stability over immediate gratification is essential for those aiming to break into higher income brackets. This means making informed financial decisions, saving diligently, and planning for the future, rather than succumbing to the lure of short-term pleasures.

Eyeing the Top 1%

For those setting their sights even higher, Forbes reports that reaching the top 1% of U.S. earners requires an annual income of at least $597,815. This goal, while ambitious, underscores the importance of aggressive saving and investment strategies to achieve such a high financial threshold.

Conclusion

Understanding what it takes to be among the top 5% of earners in various U.S. states not only puts the spotlight on the profound income disparities but also offers a blueprint for those aspiring to elevate their economic status. By making smart financial choices, advancing professionally, and investing wisely, individuals can aim to bridge the gap between average income earners and the financial elite. The journey to the top is fraught with challenges, but with the right strategies and a focus on long-term gains, it is indeed a feasible goal.