For many Americans, a six-figure salary has long been seen as the ultimate financial goal. However, according to new data from SmartAsset, earning $100,000 a year may no longer be enough to achieve financial comfort in some cities. In fact, some workers would need to make two or three times that amount to reach a six-figure level of financial comfort.
SmartAsset analyzed annual salaries in 76 American cities, adjusting them for taxes and living costs to determine what residents would need to earn to have the purchasing power of the new $100,000 benchmark. Not surprisingly, California’s cities topped the list of highest gross incomes needed to achieve that level of financial comfort.
San Francisco ranked among the top three most expensive cities, preceded by Honolulu and New York. The study found that San Francisco costs 82.8% more than the national average, and residents need to earn slightly more than $300,000 pre-tax to take home $100,000 of purchasing power.
However, San Francisco is not the only California city on the list. SmartAsset reported that California’s cities command particularly high tax rates and costs of living premiums, requiring the highest gross incomes of any state. This means that even a six-figure salary may not be enough to achieve financial comfort in the Golden State.
In contrast, Texas emerged as the easiest state to “make it,” partly due to no state income tax and the cost of living being generally below the national average. SmartAsset’s findings showed that some Texas cities required a gross income of less than $100,000 to reach the new six-figure level of financial comfort.
Overall, the data shows that the new six-figure salary benchmark is much higher than it used to be, with California’s cities among the most expensive places to live. While a high salary is still a desirable goal, it may not be enough to achieve financial comfort in certain locations. Aspiring homeowners and job seekers should consider the true cost of living before relocating to a new city or state.