We think living in New Jersey is fabulous; but depending upon whom you ask, it may be viewed as expensive. How much money do you have to earn to live in New Jersey? In this blog we’ll explore what the average income in New Jersey is likely estimated to be, based upon available sources as of February 2022.
Before we get started, if you’re a New Jersey resident (or thinking about moving to or retiring in New Jersey), take a moment to check out our other blogs:
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Before we get into it, let’s define some terms before we jump into the numbers about what people make in New Jersey.
First let’s discuss the question of what exactly counts as income, as we define it in the United States.
- Income is defined as any money you are earning through either active or passive sources. It is counted on a gross basis, before expenses, withholdings, and taxes are taken out.
- Active income may come from a job or a business you own: wages, tips, and salary.
- Passive income usually comes through capital gains, interest, and dividends earned on investments you have such as portfolio holdings or real estate. It may also come from pension, annuity, Social Security, or governmental assistance payments.
- Household income is taken to mean income earned by all members of a household above age 15.
- Salary is income earned through a job.
- Average is the sum of all values, dividend by the number of samples in the data set. This differs from the median value, which is merely the amount represented by the middle value in any data set. The average is also called the “mean.”
Median vs. average income in New Jersey
Although the question of average income in New Jersey is certainly a meaningful one, it’s important to note the difference between average and median.
Average numbers tend to be higher when you have significant outliers on the upside. And the converse it true; when you have a large number of values on the low side, the average gets skewed downwards.
- According to the US Census Bureau, the median household income in New Jersey from 2014-2019 was $82,545.
- The average income in New Jersey was much higher, coming in at $114,691.
Wait a minute!
Why such a large disparity?
The average is $30k higher than the median due to the outliers on the upside. If you look at the ten richest zip codes in New Jersey, for example, every single one has mean income greater than $250k. What this is saying is that income is not uniformly distributed throughout the state, and if you want to have a certain standard of living, it matters a lot where you chose to settle down.
What about average salary in New Jersey?
Average Salary Survey quotes the New Jersey average salary as $89,272 per year.
But having said that, it’s hard to answer the question of what a good salary is in New Jersey, as style of life varies from one person to the next. And as mentioned above, income disparities tend to be common from one zip code to another.
How does New Jersey compare to the rest of the country?
This data from the St. Louis Fed displays median household income trends in the US historically. Although income levels have risen, they took a little bit of a dip in 2020 to a level of $67,521.
New Jersey’s median household income of $82k is significantly higher (about $15k) than the US average.
What does this all mean?
What do all these statistics mean in terms of the quality of life you could expect to experience in New Jersey?
Whatever your income is, you can make the most of it through planning for life events in advance and following a thoughtful strategy that guides prudent decision making. As financial advisors in Morristown, NJ, serving clients across the country, we encourage you to peruse the other financial and investment blogs on our site and contact us if you wish to discuss your personal financial situation.
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U.S. Census Bureau, Real Median Household Income in the United States [MEHOINUSA672N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MEHOINUSA672N, January 31, 2022.
U.S. Census Bureau, American Community Survey (ACS) and Puerto Rico Community Survey (PRCS), 5-Year Estimates. The PRCS is part of the Census Bureau’s ACS, customized for Puerto Rico. Both Surveys are updated every year.
American Community Survey, DP03 Selected Economic Characteristics, 2019: ACS 5-Year Data Profiles
Average Salary Survey. Retrieved on February 3rd, 2020 from https://www.averagesalarysurvey.com/new-jersey
Income Statistics for New Jersey Zip Codes. Retrieved on February 3rd, 2020 from https://www.incomebyzipcode.com/newjersey