Many of us view a six-figure salary as something to aspire to – and for good reason.
With median American and Canadian workers earning $35,977 (U.S. Census Bureau) and $36,400 (Statistics Canada) respectively, even an entry-level six-figure salary of $100,000 would put you substantially ahead of the pack in either country.
In this article, I’ll share some interesting facts about what it takes to earn six figures and the significance of doing so in Canada and the United States. I’ll also discuss how you can build wealth with or without such high earnings.
7 interesting facts about earning a six-figure salary
1. It’s rarer in Canada than the United States
Based on The Kickass Entrepreneur’s income percentile calculator, here’s where individuals at various six-figure earning levels rank in Canada.
As you can see, those earning $100,000 annually in Canada surpass 95% of their fellow citizens. Further, it only takes an income of $200,000 to break into the 1% earnings-wise.
Here’s the American data – based on DQYDJ’s income percentile calculator – for comparison.
Those earning $100,000 in the United States outpace just 84% of their fellow citizens. Additionally, it takes an income of $400,000 to crack into the 1% earnings-wise in America. That’s more than double what’s required in Canada!
There are many possible explanations for this.
For one, America’s economy is simply much bigger than Canada’s. Among all nations, America has the second-highest number of Fortune 500 companies within its borders – a total of 121. Canada, meanwhile, ranks ninth with just 13 Fortune 500 companies.
It should be unsurprising, then, that more Americans earn high salaries than Canadians.
It’s also worth pointing out that America has an ever-expanding number of billionaires. In fact, that number hit a record high in 2020. With so many individuals earning staggering amounts of money per year, the numbers get skewed, making a six-figure haul seem less impressive.
Canada, meanwhile, has relatively few billionaires. That number is also not growing nearly as rapidly as in the United States.
2. Even within the same country, a six-figure salary’s significance varies drastically
Those earning $100,000 in the Canadian province of Prince Edward Island occupy the 96th percentile. In other words, they earn more than 96% of their fellow residents.
However, those earning the same exact amount in the Northwest Territories occupy just the 75th percentile. This means 25% of people living in the Northwest Territories earn more than $100,000. Indeed, the Northwest Territories is home to Canada’s highest median income, as reported by the CBC.
Here’s what the data looks like spread out across the entire country. The darker the color, the higher the percentile of someone earning $100,000 in that province, based on the same Kickass Entrepreneur calculator I linked earlier.
|Province||Percentile of someone earning $100,000|
|Newfoundland and Labrador||90th|
|Prince Edward Island||96th|
Here’s the equivalent map of the United States, based on DQYDJ’s income percentile by state calculator.
|State||Percentile of someone earning $100,000|
|District of Columbia||65th|
Although you can’t see it on the map (after all, it’s not a state), a $100,000 income is least significant in the District of Columbia, placing one in just the 65th percentile. At the other end of the spectrum, a $100,000 income places one in Mississippi’s 91st percentile.
Comparing a six-figure salary to average house prices per province and state
As interesting as it is to see how someone with a six-figure salary compares to others around them, what’s much more consequential is the significance of that salary in terms of living costs.
One reliable way to visualize this is by comparing $100,000 to the average cost of a house in each province and state.
Here’s the Canadian map, based on data from the Canadian Real Estate Association (CREA). The darker the color, the further $100,000 goes towards purchasing a home in that province. CREA does not provide data for Nunavut, which is why that province is blank.
|Province||Avg. house price||% covered by CA$100,000|
|Newfoundland and Labrador||$281,800||35.48|
|Prince Edward Island||$298,668||33.48|
In the majority of Canadian provinces, $100,000 goes pretty far towards purchasing an average house. Two major outliers are British Columbia and Ontario, where $100,000 is only 12.33% and 13.47% of the cost of an average house, respectively.
To put this another way, residents of Ontario and British Columbia (Canada’s first and third most populous provinces, respectively) earning $100,000 per year must generally work longer or make more aggressive payments to own their homes free and clear than those earning the same amount elsewhere.
The contrast is even more interesting in the United States. Here’s a map based on data from Zillow.
|State||Avg. house price||% covered by US$100,000|
In West Virginia, $100,000 would cover a whopping 93.4% of an average house’s cost ($107,064). Meanwhile, in Hawaii, the same amount would cover only 15.46% of the average house’s cost ($646,733).
3. Even within the same state, a six-figure salary’s significance varies drastically
When it comes to wealth, America is a country of extremes. The disparities don’t go away as you zoom in, either.
Take the state of New York, for example. According to Zippia, it has the highest income inequality among all U.S. states. As such, the significance of a six-figure salary differs drastically depending on which county you live in.
Here’s a map showing per capita (average) personal income in all of New York’s counties, based on data from the U.S. Bureau of Economic Analysis.
|County||Per capita personal income|
In the vast majority of counties, per capita income doesn’t come close to six figures. Meanwhile, in New York County (also known as Manhattan), the per capita personal income is $197,847!
In other words, a six-figure salary would place you ahead of your average neighbors in most counties. However, you’d be simply average in Manhattan.
Again, though, to fully contextualize this, it helps to compare $100,000 to house prices in each county. Here’s a map based on median house price data from New York’s Department of Taxation and Finance and Realtor.com for the Bronx, Kings, and Manhattan.
The darker the color, the further $100,000 goes towards purchasing a median home in that county.
|County||Median house price||% covered by $100,000|
In Allegany, $100,000 would go farthest, covering 132.45% of the median home’s sale price. In Manhattan, however, it covers just 10% of the median home’s sale price.
Note: If you want to really stretch a six-figure salary far, consider a concept known as geo-arbitrage. It entails relocating to an area with a cheaper cost of living. Read more about it in this article from The Frugal Expat.
4. You don’t need a four-year degree to earn a six-figure salary
You might be surprised to learn how many jobs offer six-figure salaries yet don’t require a four-year college degree. Here are some examples based on data from the U.S. Bureau of Labor Statistics.
Keep in mind that while the median salary for some of these jobs may be below six figures, that simply means you’ll need to rise somewhere within the top 50% of workers to hit that level.
Air traffic controller
Median salary: $122,990 (source)
It’s possible to become an air traffic controller with an associate’s degree from the Air Traffic Collegiate Training Initiative and additional on-the-job training.
Median salary: $121,430 (source)
Commercial pilots (including those working for airlines) need a high school diploma and a license from the Federal Aviation Administration. Additionally, a number of pilots speaking to USA Today have mentioned that having a strong understanding of math and physics is helpful.
Computer and information systems manager
Median salary: $146,360 (source)
While many computer and information systems managers have bachelor’s degrees, this isn’t always required. In fact, according to CompTIA, many IT jobs simply require a high school diploma or GED.
Nuclear power reactor operators
Median salary: $100,530 (source)
To become a nuclear power reactor operator, you generally need a high school diploma or GED along with on-the-job training and a license.
Elevator installer and repairer
Median salary: $84,990 (source)
To install and repair elevators for a living, you’ll typically need just a high school diploma or GED. Most technicians also complete an apprenticeship and receive state licensing.
Transportation, storage, and distribution managers
Median salary: $94,560 (source)
Workers in this role (which includes logistics managers) need only a high school diploma or GED along with experience in a related field.
5. A six-figure salary does not guarantee wealth
One misconception many people have is that a six-figure salary would be the end of their financial worries. Here are a few issues with that line of thinking.
As your income increases, so does your ability to spend
Lifestyle creep is a phenomenon that – if you fall victim to it – prevents you from reaping the rewards of higher wages. As your income increases, your appetite for spending money unnecessarily often does as well. The end result is that your actual wealth (i.e. your net worth) does not increase despite your higher earnings.
This is particularly dangerous around the six-figure income level due to the opportunities you unlock once reaching it. For example, you’ll likely easily qualify for loans on wealth-destroying things like luxury vehicles you’d never be able to purchase at lower income levels.
You may have high amounts of student debt
While it’s certainly possible to earn a six-figure salary without a college degree, many high earners did pursue higher education – and continue to pay out the wazoo for it.
For example, while a physician’s median salary of $208,000 per year might sound impressive, keep in mind they graduate with an average medical school debt load of $201,490. This would require payments of $2,288 per month on a typical 10-year repayment plan at 6.25% interest.
It’s hard to build wealth when such a large chunk of your income goes towards repaying debt, especially if you succumb to lifestyle creep and spend money unwisely.
As a six-figure earner, you likely live in a more expensive region
As you’ll remember from the first three points, some regions are home to more six-figure earners than others. Often, those regions also have substantially higher costs of living, which can offset the wage premium. Unless you have the luxury of earning six figures while also living in a relatively cheap region, this will work against you.
Depending on where you live, taxes can also take a huge chunk out of your six-figure haul.
Marginal tax rates in America are as follows.
|$0 to $9,950||10%|
|$9,950 to $40,525||12%|
|$40,525 to $86,375||22%|
|$86,375 to $164,925||24%|
|$164,925 to $209,425||32%|
|$209,425 or more||35%|
Here are marginal tax rates in Canada, meanwhile.
|$0 to $47,630||15%|
|$47,630 to $95,259||20.5%|
|$95,259 to $147,667||26%|
|$147,667 to $210,371||29%|
|$210,371 or more||33%|
As you can see, the taxman really takes an interest in you once you start earning six figures, meaning the amount of money you actually bring home is likely far less than you’d think.
6. A six-figure salary may not bring as much happiness as you think
According to a 2018 study, people typically achieve income satiation – the level beyond which a higher salary does not bring more happiness – around $95,000. Emotional well-being, meanwhile, taps out much lower at between $60,000 and $75,000.
In other words, a six-figure salary may not ultimately be as exciting as you envision prior to achieving it.
In light of this, you need to ask yourself whether the amount of work required to consistently earn a six-figure salary is worth it. Unless you derive joy from something other than the money itself (i.e. you genuinely enjoy the work), probably not.
7. You don’t need a six-figure salary to build wealth
While stereotypes often make it difficult to imagine how someone earning less than six figures could become wealthy, reality tells a very different story – especially once you factor in the power of investing.
For example, take someone earning $50,000. By investing just 10% of their pre-tax salary in the stock market – which produces an average annual return of 8% – such an individual could build a nest egg of $566,416 in 30 years. Sure, they won’t be buying a superyacht with that kind of money. However, it can fund a very nice retirement.
This example is fairly conservative, too. It assumes this individual never gets a raise that would allow them to increase their savings beyond $5,000 annually, which is a very unlikely scenario.
“But wait,” you might be thinking. “There’s no way to invest with that little money, is there? Don’t you need millions?” No, you don’t. Click here to learn more about how you can invest with little money.
Here are some additional tips for building wealth.
Figure out why you want to build wealth
While the appeal of building wealth in and of itself may seem obvious, most people have more meaningful motivations than simply amassing cash. Determining your motivation is an incredibly important step, especially if you aren’t earning much money.
You see, having very clear objectives (i.e. being able to retire happily at 50, leaving a financial legacy for your children, etc) will help you stay on track even when the temptation to be reckless with your money arises.
After all, you don’t have much wiggle room at lower income levels. You have to plan carefully.
Be ruthless about eliminating high-interest debt
No matter how much money you make, high-interest debt is a destroyer of wealth. This is why I listed things like “misusing credit cards” and “over-spending on cars” on my list of worst financial decisions people make.
By simply avoiding high-interest debt, you’ll leave yourself with thousands of more dollars to save and invest every year.
If you already have high-interest debt, you need to be ruthless about eliminating it. Check out tip number seven in this article for some guidance on obliterating debt.
Live below your means
Many people want to live as if they make six figures without actually coming close. This is a catastrophic mistake, especially if it involves taking on debt.
In addition to costing you tons of money in the short term, this behavior sets a precedent that will leave you incapable of building wealth if you ever make it to six figures. Remember, lifestyle creep is a thing!
Set concrete targets
If you want to truly achieve wealth, vague goal-setting is not enough. You need to identify exactly what “wealth” means to you.
For many people, this means being able to retire and enjoy life even in the absence of an income. That’s fantastic! However, unless you know exactly how much money you need to achieve a happy retirement, it’s tough to make progress.
Identifying what’s known as your financial independence number is a great place to start. Simply take your annual spending and divide it by 4% (0.04). This will give you an idea of how much money you need to cover expenses in retirement, assuming you withdraw 4% of your savings each year.
This isn’t an exact science, though. Read this article for some very important caveats that will help you ensure the accuracy of your target.
By setting an appropriate target, you’ll be able to gauge at all times how you’re progressing financially. There’s nowhere to hide, which is the point; you’re either on target or you’re not.
I hope this article has helped you think critically about what it means to earn a six-figure salary. I also hope that, in doing so, it has humanized that level of income for you.
Earning six figures per year won’t solve all of life’s problems. However, by building healthy habits today – no matter how much money you earn – you can drastically improve the likelihood that a six-figure salary will translate to greater wealth when you achieve it.
Check out this article for some insights into healthy financial habits wealthy people possess.