What is the Estonian equivalent to a $100 000 salary?

If you read enough personal finance forums then it becomes clear that many people in the United States think that $100 000 is the magical number which guarantees that you don’t have to worry about money. This made me wonder however, what’s the equivalent number in Estonia.

How many people in the US make 100K?

Essentially I did some digging through Wikipedia to verify some numbers that I’ve seen floating around forums. The info is a few years old, but salaries haven’t really increased that much in the past few years so the % of people who receive 100K salaries is unlikely to have increased noticeably. As the US Census Bureau information says, less than 7% of people make more than $100 000 per year.

This salary is generally attributed to only a few fields. It generally includes doctors, lawyers, IT, CEO/COO/CIOs, engineers, bankers etc. This means that it is a salary that isn’t really reachable just through working hard – you have to work in the right field, you have to climb the corporate ladder and it’s also associated with ridiculous working hours.

The Estonian equivalent to 100K

I did some digging in the Statistics Agency web and I looked up information about Estonia in 2010 so it would be comparable. The Agency shows information by deciles, so I can get the number for the top 10% of Estonian salary earners, which will be roughly usable. As it turns out, the top decile of Estonian salary earners make 1400€+ per month. Average salary in 2010 was 820€. Currently it’s 986€, so a 20% increase. Assuming that the top 10% have increased their salaries 20% as well then the cutoff would be 1680€, if their salaries have increased by 30% then it would be 1800€+.

Honestly? I was very surprised. I expected it to be way higher. Even a 1800€ gross salary is 21600€ per year – only roughly $30 000! Also, a 1800€ gross salary comes to less than 1400€ net. I’m not even sure what to conclude from that. One thing that would make sense is that the salary inequality is a lot lower in Estonia than I assumed. It might also mean that it’s just the top two-three deciles which are closer to one another than I expected.

I definitely agree that looking at the current situation in Estonia a 1800€ gross salary wouldn’t really force you to worry too much, but overall it’s way harder to build wealth on a salary like that than it is with a $100K salary in the US. This leaves a bleak conclusion – becoming rich in Estonia just off your salary is a ridiculous dream.

P.S. If anyone can dig up more recent statistics about Estonia, I’d be happy to hear them!

11 thoughts on “What is the Estonian equivalent to a $100 000 salary?

  1. Kristi, very many Estonians actually earn their money outside of the country, mainly in Finland. In my subdivision, half the dads work either in Finland or Norway. So actual money in ppl hands is much higher than statistics show.

    1. I did wonder, how those were considered in statistics – since if they declare their income in Estonia (aka those who come home for the weekends) then they should be included.
      Also, I wonder how much that truly influences the situation? From what I can find, the assumption is that there are ~35000 Estonians in Finland. That comes to only about 5% of the total work force of Estonia. Add in the other countries where Estonians work as well, I doubt that it would climb too much over 10%.
      Numbers wise this would probably mean about 500€ extra per month for the cutoff? That still isn’t a whole lot.

  2. Agreed, getting rich from only salary is for most of us an impossible dream. It get’s less impossible with successful investing but still takes a very long time, mostly.

    Salaries are apparently higher in countries like US or Finland. For those going there, saving up a pile of cash and then return home to affordable Estonia it would be easier to get rich. A risk is that if they decide to stay in the new country not much would’ve been won moneywise since not only the salary but also the costs are higher.

    $100k sounds is a ridiculous amount of money but I’m sure there are quite a number of people in that income-bracket that waste it all on stuff like fancy cars and expensive vacations. As we all here know it’s not about the income so much as the expenses.

    Here’s a blog from an american guy who claims to be on his way to financial freedom without that high incomes but through super-frugal living and dividend investing.


    Inspiring and interesting reading I think. Though this guy seems way too extreme in my opinion. One of his advice is to forget the latte 😮
    I would never do that.

    1. Indeed, the difference in salaries in most sectors is anywhere from 2-4x between Estonia and Finland. However, expenses like rent are way higher there as well – this leads to the stereotype of a bunch of Estonian construction workers living in tiny apartments like sardines in cans. Not a very motivating mental image.

      I do agree to some extent that it is the savings rate that matters not so much the income number. Reading Early Retirement Extreme (http://earlyretirementextreme.com/) I was amazed by what people were willing to give up to get to financial independence.

      It wasn’t just giving up lattes though – it was giving up anything but the absolute bare minimum. While living like a monk during a pilgrimage might be fun, I don’t see it as a sustainable lifestyle for several years like most these tactics suggest – in the end, life is for living it and enjoying!

      1. Bare minimum sounds definitely no good. I can understand that a few enthusiasts may try that method to be able to retire quicker but it’s not for me either. I join the Kristi school of living and enjoying. Hopefully I can retire one day even without sacrificing the lattes :)

  3. You should probably take into account that in US the tax system collects after the fact, in Estonia it’s taken out of your salary before. This creates probably quite a lot of difference already (in addition to everything else). Unless the numbers you had are after taxes for US too.

    Another thing is that I remember seeing the income spread graph and there was something like 2-3% in the top earners part and a huge gap and then the average majority came in (that was some 8 years ago, but if Estonia is anything similar to other countries, then that gap has probably gone wider).

    So that would mean that the difference is only so small, because you looked at the top 10% which includes 7-8% of the “low earners” which equals it out more.

    The third thought here is to understand that most high earners in Estonia have likely figured out how to reduce their official income through companies, tax havens, frontmen etc. That’s an “industry” on its own. Our tax system is built in a way that almost everything is better to do through a company and that also provides opportunities to write off quite a lot of possible expenses to one of those companies without even needing a high income to live a luxurious lifestyle.

    Your point about it being difficult to achieve financial freedom in Estonia through salary is valid in the sense that it’s difficult to reach the amounts that are considered enough in US.

    However, since most of us are used to living with smaller expenses, the amount needed should also be smaller and thus there shouldn’t be too much difference between a low earner in Estonia and a low earner in US.

    1. Both numbers are in gross. (The 100K is gross, pre-tax as well as the Estonian salary of 21K is gross.) This is why I was so surprised.

      I wouldn’t say that there is such a huge difference in the number of people who are incorporated in Estonia and in the US. I don’t imagine that most people make that much _extra_ from their side businesses, but I guess it might mess with the average a bit if people hide their expenses under their business accounts.

      I think I’d have to think it through though – is it easier to be a low salary earner in Estonia? Yes, you don’t have health benefits in the US if you’re a low salary earner, but if you just look at price comparisons, then food & technology and several other things are cheaper in the US compared to Estonia. I mean, the $1 menu in the US is the 1€ menu in Estonia if we look at McDonalds, but they Euro is stronger than the dollar!

      1. US has huge market, compared to Estonia. I think that’s the reason.
        Besides 1€ meal sounds better than 80cent meal ;).

        My rule of thumb is that for every 10k€ invested, I can live one month of passive income. Be it Tallinna Vesi, Bondora or Tallinna Kaubamaja. It should even up nicely. So I need at least 120k€.
        Every year I have to save/trade stocks for that 10k€. So every year I get one month closer to FI. It should get easier by time. To meet goals we are lucky to have Finland, Sweden, Norway nearby for couple years of work, if salary in Estonia is too low :). My next goal is to go work in Finland, to speed things up a notch.

        You only have to put your mind to it, doesn’t matter if you live in US or Estonia. FI is still achievable!

  4. According to your text the average salary in Estonia is 986€. But how many people do you know earn this amount? There are some, but majority of people earn below that. There is bias in calculating average – it’s affected by outliers, people, who have much bigger salaries than ‘normal people’ do (like politicians in Estonian Parliament with approx. 3.5k €). These outliers increase the average salary – it’s hard to say how much, but they definitely do have an impact. I would say better measurement is median – the middle value in a series of values arranged from smallest to largest. Median salary will give you a better overview about people’s salaries, as half of population is below and half of population is above this sum. Median salary in first quater in 2014 was 689€. This is much smaller number and proves your statement that becoming rich in Estonia from your salary is ridiculous dream, at least for most of people.
    But I disagree with your statement that salary inequality in Estonia is small, however I do not have data to back up my opinion.

    1. It is maybe not just that Estonia has a small salary gap in an absolute sense, but the gap is generally smaller in European countries than in the US – however, the difference between minimum salary and a parliament member’s salary is still pretty ridiculous!
      But you are correct that one has to be weary of the way statistics work – the average salary is about 1000€, but barely 1/3 of the people actually make more than the average due to what you said – the high salary outliers. Another thing that’s interesting about Estonia is that those people who make more than the average are very likely to be based in Tallinn or Tartu and the other parts of Estonia are much much poorer. I live in Tallinn currently so I do know many people who do make that amount (there is also a higher cost of living here), but I’m originally from Rakvere and I definitely know people who could only dream of such salaries there.

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