Is $70k a Good Salary To Live Comfortably?

There is a saying out there that money can’t buy you happiness. However, what money can get you is peace of mind. Being able to take care of your family and loved ones is a source of calm, and it is knowing that you have that part covered means that you can spend your time and attention on the better things in life.

So if you are earning $70,000, is that enough to have those covered? Is $70,000 a good salary to live comfortably in the US?

$70,000 Salary Breakdown

The first thing in considering whether or not $70,000 is a good salary is to see how much you are compensated for your time. How does it compare with the highest-paying hourly wages? How much is it compared to the minimum wage? This is why it can be a great idea to break your salary down.

In this case, we’ll break it down to how much a person earning $70,000 earns. We’ll do this on a monthly, biweekly, weekly, daily, and hourly basis.

A $70,000 Salary Monthly

So let’s see what our $70,000 yearly breaks down to monthly. We all know that there are 12 months in a year, so it’s a simple calculation:

$70,000 /12 months = $5,833 per month

A $70,000 Salary Weekly and Biweekly

A lot of people get their paychecks weekly or on a biweekly basis. Thus, it is a good idea to see what numbers you can expect in this period.

To look at how a $70,000 salary breaks down weekly, we must consider that the year has 52 weeks and 26 two-week periods. In this case, you would be looking at:

$70,000 / 52 weeks = $1,346 per week

and looking at it biweekly

$70,000 / 26 two week periods = $2,692 biweekly

A $70,000 Salary Daily

Now, let’s take a look at what a day’s work of someone that earns $70,000 a year is worth. To do this, let’s consider that a person works 5 days in the week of those 52 weeks. Knowing this, we get that there are a total of 260 workdays in the year. So then the calculation becomes simple enough:

$70,000 / 260 days = $269 daily

Now, this is for the most general case. If you work 6 days a week, this does fall a bit. A person working 6 days a week will have worked 312 days in the year. In this case, a person would earn $224 daily.

$70,000 Salary Hourly

So now, let’s look at how much you would be earning hourly if you were working your standard full-time job. In this case, we consider the traditional 8-hour workday. We know that this doesn’t apply to most cases, but the classic 9 to 5 is still prevalent worldwide.

In this case, we can divide the daily income by the number of hours worked that day:

$269 daily / 8 hours = $33.6 hourly.

Now, this is an assumption for the most usual scenario. How many hours you work will change these values quite significantly.

Is $70,000 a Good Income After Taxes

While we’re on the theme of sayings, there is one that says there’s nothing certain but death and taxes. This applies everywhere and even in the US. Income taxes are one of the main factors that reduce what you end up taking home, and we all have to pay them. So how exactly do taxes affect what we end up within our pockets?

Federal Income Tax

Let’s first look at the federal income tax. These are charged independently of where you live or where you file your taxes. There are seven marginal tax brackets at the federal level: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. In this case, $70,000 ends up classified in the 22% bracket.

Given that this is a marginal tax, it works as follows: You are first charged 10% tax on $9,950. After that, you are charged 12% for everything between $9,950 and $40,525, which is $30,575. The remainder gets charged 22%.

Now, if we consider the standard deduction of $12,550, we can estimate a final tax percentage of approximately 12%. This means that we can estimate that you will owe $8,429 in federal income taxes, and you’ll thus be left with $61,571 after federal income taxes.

State Income Tax

In terms of state income tax, this can be pretty variable depending on where you are making your income. Remember that where you file your income depends on where you make it and not necessarily where you live.

Some states like Colorado, Illinois, and Indiana charge a flat income tax. How much this is can range from 3% in Pennsylvania to 5% in Kentucky.

Other states use a progressive tax system where higher levels of income are taxed at a greater percentage rate. Lastly, we must mention those states that charge no state income tax like Alaska, Florida, Nevada, and Texas.

In our hypothetical case, let’s consider a flat state income tax of 4%, and this is well within what we can expect to be paying in state income taxes.

In this case, we can consider that our 4% State income tax will result in you paying $2,800 in annual state income taxes.

Medicaid and Social Security

Lastly, let’s look at our FICA taxes. These include both Medicaid and Social Security, and these have a flat tax rate. The Social Security tax rate is 6.2%, and the Medicare tax rate is 1.45% for 2021 and 2022.

As such, the FICA tax rate is at 7.65%, resulting in you paying the government $4,340 in annual FICA taxes.

Total

So let’s see what our net income is after paying our taxes:

$70,000 – $12,550 – $2,800 – $4,340 = $50,310

Thus, after paying taxes, we end up with $50,310 in annual take-home pay. This is equal to $4192 that we can spend monthly. Do note that these calculations are just estimates, and you would have to consider your case when filing your taxes.

How Far Will a $70,000 Salary Stretch?

So after the government has taken its share, how far will our salary get us? Well, that does depend in large part on where you live. A $70,000 salary in one place of the county does not guarantee the same quality of life as in another place.

According to the CNN cost of living index calculator, a $50k salary after tax in Manhattan New York, is only equivalent to a $22k salary in Pittsburgh, Massachusetts. This shows the differences in the cost of living in different places in the county.

So how could we budget our take-home pay? When considering the budget, let’s assume the 50/30/20 rule for budgeting. In this case, 50% goes towards needs, 30% for wants, and 20% for savings and debt repayment.

Basic Needs

Given that we will allocate half of our salary towards needs, we will be giving $2,096 towards our needs. In this category, we have things that we have to pay for and cannot live without. This includes housing, utilities, groceries, transportation, and insurance. In this case, we’ll be looking at how much a single person can spend in such a case.

Housing

Housing is something that can vary wildly depending on where you live. If you are a single person living in the US, how much you will pay on housing can vary quite a lot.

The states with the highest median rent are Hawaii and California, with $1,617 and $1,503 in 2021. The lowest, on the other hand, is West Virginia at $725. It’s easy to see that where you live will determine how far your dollars will go.

In our hypothetical case, let’s allocate a middle-of-the-road value for rent at $1,090.

Utilities

A US family typically spends $2,060 on average per year for home utility bills when considering utilities, translating to $172 a month. As a single person living, we can reduce this slightly, and we believe it reasonable to set it at $120 a month.

Groceries

When looking at groceries, we can consider the case of a single person. The US Department of Agriculture offers some monthly grocery budgets. A single person between 25 and 50 thinks a sensible plan to be $330 per month.

Transportation

According to Business Insider, adults in the US can spend between $2,000 and $5,000 on transportation costs, depending on where they live.

For our hypothetical example, we will consider annual spending of $3,000 a year. This will translate to $250 a month on transportation costs, including maintenance insurance, etc.

That being said, this is highly dependent on your lifestyle and the infrastructure around you. People biking to work can look at prices that are much lower than $250 a month.

Insurance

When considering insurance, the average cost of health insurance in 2020 was $305. We will view this number in this case, but do note that it can vary significantly. This depends on your age, where you live, and your employment.

Total

All in all, we can be looking at the following budget in our case:

• Housing: $1,090
• Utilities: $120
• Groceries: $330
• Transportation: $250
• Insurance: $305

This means that we’ll be spending $2,095 a month on our needs and have them covered. However, do note that this is dependent on your lifestyle and where you live.

Wants

Now, let’s take a look at our wants. In this case, we can allocate 30% or $1,257 towards that. What do we put in the ‘wants’ category? Our wants would be the likes of eating out, events, entertainment, and clothes shopping. Anything that you do enjoy paying for but can do without should you need to.

Our 30% will get us quite far in this case and allow for some luxuries. If we are considering only this in the question of “is $70,000 a good salary?”, the answer is yes. That being said, this does depend in significant part on your lifestyle. If you like staying at home more, you may be looking at putting more into savings.

Savings

Now, on the 50/30/20 plan, we would be allocating 20% of our net income towards savings and paying off our latent debts. This would translate to us putting $838 away every month. In a year, this would be 10,056, which can be put into your 401(k) retirement or investing.

Also, remember that this money should go towards a rainy day fund, and this is money that you can call upon for any unforeseen emergency.

Is $70,000 A Good Salary For A Single Person?

If you are a single person and are asking yourself, “is $70,000 a good salary?” you’ll be happy to know that it generally is. With that income level, you have more than enough to cover all of your needs, wants and have money left over for your savings.

That being said, we have to remember that this will depend on where you live and your lifestyle. It’s easy to spend all your income on your wants and end up in economic trouble. This is why you should always try to keep on top of your finances.

Is $70,000 A Good Salary For A Family?

In terms of building a family, this does make the thing a little different. In 2020, the median household income was $67,521. While this is a decline from previous years, earning $70,000 places your household right above the 50% mark and within the middle class.

If you are the sole source of income, you may have to make some budgetary decisions. Taking care of another person and children will put a significant dent in your disposable income. That being said, as part of the middle class, you would not be having issues getting to the end of the month.

Conclusions

All in all, the question remains. Is $70,000 a good salary? The short answer is yes, but with a caveat. A salary of $70,000 is more than enough to allow you to have significant disposable income and set money aside.

However, where you live has a significant impact on how much you will have left. Given the vast differences in the cost of living across the US, this can change your view.

How much you will pay to cover your basic needs can be very different. Someone living in the midwest will have much lower expenditures than living in California or New York. This will ultimately have a significant effect on your perception of a ‘Good Salary’.