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The average annual pay for a mental health therapist in the U.S. is $75,895, according to employment website ZipRecruiter.

But there are many factors that can influence this number, including experience, specialty and location. If you’re interested in starting a career as a therapist, employment demand is expected to be strong so it’s likely there’s good job security.

Here’s a closer look at what a therapist does and how much money they can make in a year.

What Is a Therapist?

If you like talking with people and helping them work through issues to improve their lives, a career as a therapist might be a good fit.

Therapists generally specialize in working with specific groups of people or in certain areas. For instance, some might concentrate on working with children, older adults, or married couples, or with people who need help with issues like eating disorders or drug abuse. Therapists can work in different settings, including health practitioner offices, hospitals, schools, private practices, and home health care services.

It can be a long path to becoming a therapist. Therapists need an undergraduate degree and typically have a master’s degree in psychology or in a related field or specialty. There are also hands-on experience requirements through supervised clinical work. States have different requirements when it comes to obtaining a license, but the process usually involves filling out an application and passing an exam.

There are other skills that go beyond education that help make a good therapist. Soft skills like strong communication and organization skills, being a good listener, and having empathy and patience are also important to being successful in the profession.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

Therapist vs. Psychologist

The title “therapist” is often used broadly to include various professions. It’s sometimes used interchangeably with “psychologist,” but there are differences between the two.

The educational requirements are heftier for those interested in pursuing a career as a psychologist. Psychologists typically need a doctoral degree in psychology and to pass certain exams to be able to secure a license.

There is strong demand for psychologists. The Labor Department forecasts employment of psychologists to grow 6% from 2022-2032. Over that decade, there’s projected to be about 12,800 openings a year.

How Much Do Therapists Make Starting Out?

When you’re just starting out as an entry-level mental health therapist after all those years of education and clinical work, you can expect to earn an average of total pay of around $46,600 a year, according to data from Payscale. As you grow in your career and gain one to four years of experience, the average compensation increases to $50,677.

But keep in mind that there are a lot of considerations when it comes to determining a good entry-level salary, including location, experience, skill level, specialty, and demand.

What Is the Average Salary for a Therapist

Wondering how much a therapist makes after they’ve been working for a few years? The average annual salary for a mental health therapist in the U.S. was $75,895, according to ZipRecruiter. Here’s how that breaks down: $36.49 an hour or $6,324 a month.

For marriage and family therapists, the median annual pay was $56,570, according to data from the Labor Department. The growth rate for therapists in this field is expected to grow 15% from 2022-2032 — a lot faster than the average.

There’s a large range in how much a therapist can make, with ZipRecruiter seeing the top earners (those in the 90th percentile) making $118,000 annually.

Note that while some therapists will choose to bill by the hour, when it comes to compensation, there’s a difference between being paid salaried vs paid hourly.

Recommended: What Is Competitive Pay?

What Is the Average Therapist Salary by State?

Wondering how a therapist’s salary compares to the highest-paying jobs in your state? Here’s a breakdown of what the average annual salary of mental health therapists by state.

Therapist Job Considerations for Pay and Benefits

Helping people better themselves and overcome problems can be a very fulfilling line of work. And there’s a need for more people to work in the mental health field.

For example, employment growth for substance abuse, behavioral disorder and mental health counselors is expected to increase 18% from 2022-2032, according to the Department of Labor. Because of these strong employment growth projections, being a therapist likely comes with job security.

Becoming a therapist can also bring scheduling flexibility, especially if you run your own practice. Being able to set your own hours can result in a better work-life balance. However, some therapists might have to offer after-hour sessions to work around clients’ schedules.

Working one-on-one with people and forging relationships can also be a satisfying perk, but it can also be emotionally stressful. That’s why this profession might not be the best fit if you tend to be more introverted.

Recommended: 15 Entry-Level Jobs for Antisocial People

Pros and Cons of Therapist Salary

The educational requirements for a therapist are higher than other professions, which could mean you graduate with a hefty debt load that can put pressure on future earnings.

However, your earnings potential increases as you gain more experience and the pay is higher than other occupations. The Labor Department reported that the median weekly earnings of full-time workers were $1,118 in the third quarter of 2023 The average weekly pay for a mental health therapist in the U.S. was $1,459 in November 2023, according to ZipRecruiter.

The pay and benefits can differ depending on where a therapist works. For instance, joining a bigger practice or hospital could bring about additional benefits like retirement savings plans and health care benefits compared to smaller or a solo practice.

The licensure requirements to become a therapist can be time consuming. Each state has its own licensing requirements that you’ll have to navigate. There can also be continuing education requirements in order to maintain your license.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

Becoming a therapist can be very rewarding on a personal, professional, and financial level. Be prepared for the path it takes to get to this career: an undergraduate degree, a master degree in a specialized area, clinical experience, the state license and exam process, and continuing education.

To help decide if this is the right career path, evaluate what’s important to you in your career and if it’s financially feasible. For some workers, a $100,000 salary is good, while others might need more or less depending on their cost-of-living.

Take the time to evaluate your budget. The education requirements could mean taking out student loans, which can put strain on your budget. Online tools like a money tracker app can help you create a spending plan that’s right for you.

FAQ

What is the highest-paying therapist job?

According to the Bureau of Labor Statistics, a therapist can earn upwards of $111,800 a year.

Do therapists make $100k a year?

While a typical mental health therapist makes around $75,895 a year, it is possible to earn $100,000 or more a year. Salaries often vary depending on experience, specialization, and location.

How much do therapists make starting out?

Early in their career, a therapist earns an average of $46,600 a year, according to Payscale. But with more experience, compensation can increase to $50,677.

Photo credit: iStock/LightFieldStudios

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One of the most important things you can do in your 30s is to start prioritizing retirement savings if you haven’t done so already.

Building retirement savings at 30 is not always an easy task, even if you’re earning a higher salary. Financial responsibilities often increase at this time, but it’s important to keep retirement in mind even as you hit other milestones such as buying a house or starting a family.

To save for retirement in your 30s, you’ll need to balance your daily spending with your long-term goals. The sooner you can begin saving for retirement the better.

How to Start Saving for Retirement at 30

You can set yourself on a path to healthy retirement savings by using the following strategies. First up, putting money into a designated retirement plan.

1. Contribute to a 401(k)

Saving in tax-advantaged retirement accounts available through work, such as a 401(k), is one of the best things you can do to start saving for retirement. Your 401(k) allows you to contribute up to $23,000 a year in 2024, up from $22,500 a year in 2023. Contributions come directly from your paycheck with pre-tax dollars, which lowers your taxable income in the year you make them.

Regular, automatic contributions, coupled with the benefits of compounding returns, can help your savings grow even faster. Starting a 401(k) at 30 gives you several decades for your funds to grow over time.

Also, 401(k)s allow employers to contribute to your retirement, and many will offer matching funds as part of your compensation package. Aim to save at least as much as is required to receive your employer’s match. Work toward maxing out your 401(k) contributions, especially as your salary grows over time.

You can access the funds penalty-free once you reach age 59 ½, but you will owe taxes on the money at that time.


💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

2. Open an IRA

An IRA is a retirement account, which anyone with earned income can open. If you don’t have a 401(k) at work, opening an IRA can give you access to a tax-advantaged account to save for retirement. Even if you already have a 401(k), opening an IRA can be a good way to save even more, though you won’t get to write off your contributions.

For 2024, contribution limits to IRAs are $7,000 per year, up for $6,500 in 2023.

IRAs come in two different types: traditional and Roth IRAs. If you don’t have a 401(k), you can make contributions to traditional IRAs with pre-tax dollars. Like a 401(k), money in these accounts grows tax-deferred, and you’ll pay the taxes on it when you make withdrawals in retirement.

If you meet certain income restrictions, you may be able to contribute to a Roth IRA instead. In that case, you’ll make the contributions with after-tax dollars, but your money will grow tax-free inside the account and you do not have to pay taxes when you make withdrawals.

Recommended: Traditional vs. Roth IRA: How to Choose the Right Plan

3. Plan Your Asset Allocation

Diversification is the act of spreading your money across different asset classes. To minimize risk from a decline from one type of asset, it typically makes sense to create a diversified portfolio, including a mix of asset classes, such as stocks, bonds and other assets.

Your asset allocation refers to the proportion of each asset class that you hold. Your asset allocations will reflect your goals, risk tolerance, and time horizon. Given the relatively long period until your retirement, you might consider a relatively aggressive portfolio consisting mostly of stocks in your retirement account.

Stocks typically provide the most potential for growth, but they also fluctuate more than some other asset classes. Since you have three decades or more before you retire, you have time to ride out the natural ups and downs of the market.

Bonds, which tend to be less volatile than stocks but also offer lower returns, may balance out the riskier equity allocation. As you approach retirement, you may consider rebalancing your asset allocation to include more conservative investments to help protect the income you will need to draw upon soon.

Target-date funds are a type of mutual fund that automatically readjusts your portfolio as you near your target date, often the year in which you wish to retire.

4. Diversify within Asset Classes

Just as a portfolio with different types of assets offers some downside protection, so too, does diversification within those asset classes. If you invest the entire stock portion of your portfolio shares in just one company and share prices in that company drop, the value of your entire portfolio drops as well.

Now imagine that you own shares in 500 different companies. When one stock fares poorly, it will have a relatively small effect on the rest of your portfolio. Diversification helps limit the negative effects that any asset class, sector, or company could have on your portfolio.

You can further diversify your portfolio by including companies from different sectors and of all sizes from different parts of the globe. This same idea is true for other asset classes. For example, you could hold a mix of government and corporate bonds, and the corporate bonds could represent companies from various sectors and locations.

One way to add diversification to your portfolio is by investing in mutual funds, exchange-traded funds (ETFs), and index funds that invest in a diversified basket of stocks. For example, if you buy shares in an ETF that tracks the S&P 500 index, you’ll be investing in the 500 stocks included in that index.

5. Don’t Cash Out your 401(k) if You Get a New Job

If you’re only in your 30s, it’s likely that you’ll change jobs a couple of times or more, over the course of your career. When you change jobs, you’ll have a number of options for what to do with the 401(k) you hold with your previous employer.

One of these options is to cash out your 401(k). But this is typically not a great idea from a personal finance perspective. If you take a lump sum payment and you’re younger than 59 ½, you may not only owe income taxes on the withdrawal, but also a 10% early withdrawal penalty. What’s more, your money will no longer be working for you in a tax-advantaged account, potentially setting you back in your retirement savings goals.

A better option is to roll over your 401(k) into another tax-advantaged retirement account, such as your new employer’s plan, if they offer one, without paying income taxes. Or you can roll your 401(k) into an IRA without paying taxes. IRA accounts offer the added benefit of additional investment options, and they may have lower fees than your 401(k).

Recommended: How to Transfer Your 401(k) When Changing to a New Job

6. Protect Your Earnings with Disability Insurance

An injury or an illness that keeps you from going to work can hamper your retirement savings plan. However, disability insurance can help cover a portion of your lost income — usually between 50% and 70% — for a period of time.

Most employers offer some sort of short-term disability insurance, with a benefit period of three to six months. Some employers may offer long-term policies that cover periods of five, 10, or 20 years, or even through retirement age.

Check with your employer to see if you are covered by a disability policy and whether it provides enough coverage for your needs. If your employer’s plan falls short, or you don’t have access to one, you might consider purchasing a policy on your own.

The Takeaway

The earlier you can start saving for retirement the better. A long time horizon gives you the opportunity to take advantage of compounding growth for a longer period of time, which can help you increase the amount you’re able to save. Pay attention to the fees you’re paying on investments, which can eat away at returns over time.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Photo credit: iStock/AJ_Watt

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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