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September 13, 2021

Income threshold for happiness: $75,000 a Year

Money can't buy happiness, but a recent study shows that having it doesn't hurt either.

The study, which analyzed the behaviour of 450,000 Americans over the past two years, suggests that there are really two forms of happiness: day-to-day contentment and overall satisfaction with one's place in the world.

Analyses of happiness don't often make this distinction, and it’s an important new development in this line of research, maintains Daniel Kahneman, one of the study’s authors.

That’s because while earning more money does improve our daily lot, it appears there’s a limit to what it can do.

What’s the threshold? About $75,000 a year – after that, it's just about keeping score. More money “does nothing for happiness, enjoyment, sadness or stress,” the study concludes.

People who earn more than $75,000 say they feel better about their lives generally. But how happy they are on any given day doesn't really seem to change that much.

On the other hand, most people’s overall sense of success or fulfillment does continue to rise as their earnings grew beyond that point. But this isn’t the same as experiencing day-to-day happiness, the researchers suggest.

"More money does not necessarily buy more happiness, but less money is associated with emotional pain," they write.

"Perhaps $75,000 is a threshold beyond which further increases in income no longer improve individuals' ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure."

What do you think? Is 75k a year a significant threshold? Or is happiness really even a money issue to begin with?

By Gordon Powers, MSN Money

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo), canoe.ca, AOL.ca, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...