You Should Be Making $200,000 by 40

I love searching Google News for the word “money” and then picking the most ridiculous headline:

This Is How Much Money You Should Be Making by the Time You’re 40

Today’s headline comes from Time’s money section, and—as these things often go—the article has very little to do with the promise it makes:

If you have a college degree, you can expect your income to climb sharply through your 20s and continue to rise at a slower rate once you hit your 30s, according to career expert Penelope Trunk. But after you hit 40, you essentially hit a pay ceiling that lasts for the remaining 25 years of your career, an analysis of data from PayScale.com has found. Raises workers get after 40 are often barely enough to keep up with inflation.

That’s useful, if unsurprising information. It doesn’t track with my earnings at all—I mean, it kinda does, because I went from seasonal and temp work to a full-time job in my 20s, which was a significant income increase. But the raises I earned at that job were nowhere near the rate bumps I’ve been able to earn as a freelancer in my 30s.

Anyway. Does the article answer the question it poses? Do we know how much you’re supposed to earn by the time you’re 40? Sort of.

A study published last year found that once you make around $200,000, having more money won’t make you any happier.

So what they’re saying is that you need to hit that $200K mark by 40 or you’ll never hit it at all, right? (I’d better get working.)

But don’t panic if you’re nowhere near $200,000 — or, for that matter, if 40 came and went some time ago. As it turns out, $200,000 is actually the outer edge of the money-happiness connection. In fact, the researchers found that the “wealth benefit” — a sort of happiness buffer that protects people from negative emotions — begins to taper off at an annual income of around $80,000.

Ah. Okay. All we really need is $80K, and we’ll be fine. We probably won’t be able to buy a house on that salary, depending on where we live and how much we like avocados, but we won’t have… wait, are they talking about all negative emotions, or just the ones related to money? Because I earned just over $80K last year, and although I felt very happy to be able to pay off my debt and fund my Roth IRA and stay in a Sheraton that had a robot butler, I still had the occasional negative emotion.

Then the Time article references a Princeton study from 2010—the same study we’ve referenced on The Billfold more than once—that claims we’ll be happy with just $75K, which… sure, in 2010 dollars. (The Bureau of Labor Statistics notes that $75K in 2010 is worth $85K today.)

The takeaway seems to be that whatever number you’d like to earn, make sure you earn it by age 40.

Which would have been a better headline.

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