$100,000 income: No big deal anymore
The Cost of Living Index compares the cost of housing, utilities, grocery items, transportation, health care and miscellaneous goods. According to Bankrate's cost of living comparison calculator, you'd need to earn about $151,000 in Boston to have the equivalent of $100,000 in Houston. And if you were living on $100,000 per year in Memphis, Tenn., you'd have to earn roughly a whopping $268,000 to maintain the same standard of living in parts of New York City. While salaries are often higher in cities with higher costs of living, they don't always match up to provide the same quality of life.
"When you live in these high-cost metro areas, it just gets increasingly difficult to do with any income. When more of your money is going to housing, you've got less left over for savings and other expenses," says Adam.
Household size and the number of children in the home also have a large impact on the power of a $100,000 income. According to the U.S. Department of Agriculture, the cost to raise a child from birth to age 18 for a middle-income, two-parent family is $234,900. That's up nearly 40 percent from 10 years ago and doesn't even include college.
In recent years, college tuition costs, which have been growing faster than the rate of inflation for more than two decades, are rising even quicker. According to the College Board's annual Trends in College Pricing report from 2011, the average cost of tuition at a four-year public university has grown in current dollars from $3,508 in 2000 to $8,200 in 2011. That's more than 10 percent per year, which is almost three times the average inflation rate of 3.4 percent between 1914 and 2012.
"The reality is that college tuition exceeds mortgage payments for a lot of people. If you've got two kids and have college costs, you're probably not going to feel rich on a $100,000 income," says Joe Pitzl, director of financial planning at Intelligent Financial Services.