Two weeks ago I asked people with six-figure salaries to share their stories. There was a great response, and I wanted to both summarize and add to the discussion some more.
$100,000 Isn’t That Much… Is It?
Many people expressed that $100,000 is simply not very much money anymore, especially in certain urban areas like the San Francisco Bay Area. I went out to find some numbers to back this up.
Initially, I quoted a study that stated that only about 5% of individuals in the United States made more than $100,000. But if you take into account entire households instead, 16% of them nationwide earn over $100,000. However, in the San Francisco Bay Area almost twice as many households (31%) made that much. Here is a graph from Wikipedia that compares the income distribution among Bay Area households to the national level.
Having almost a third of households over the $100k mark would definitely skew perceptions. This is supported by the CNN Cost of Living Calculator, which says that earning $100,000 in Atlanta is comparable to earning $172,000 in San Francisco. Put another way, earning $100,000 in San Francisco is comparable to earning $58,000 in Atlanta.
That’s a bigger difference than I thought. Still, remember that the 16% and 31% figures are household figures. Also, the majority of the people that I know who work in San Francisco don’t own houses there. In the end, while making $100,000 as an individual may not be considered “rich” in certain areas, there is still no way it can be considered “poor”.
Who’s Making Six Figures?
Based on the completely unscientific comments, I made a chart showing the the breakdown of six-figure earners by job description. The categories were all very general, and some were very tough to pigeonhole. For example, what is a self-employed software project manager? Tech? Small Biz? Management?
What does this chart show? Really, not much with regards to specific professions. My two takeaways were that (1) there is a very wide variety of jobs that can make a healthy salary, and (2) you need a useful skillset and effort. Nobody responded that they simply moved papers back and forth, or that they coasted into their position. Everyone needed some combination of talent, passion, ingenuity, education, and hard work to get to where they are now.
Who Cares?
Really, this is not to suggest that making $100,000, or $200,000, or whatever, should the primary goal for anybody. As with many things, it is about balance. Many folks noted that they used to make more money, but now make less but are happier overall. Others noted the high debt levels and long education (and thus missed salary) that come with certain professional careers.
Also, we didn’t focus on the total compensation package, including health insurance, stock options, pension benefits, or other perks. I know plenty of lower-paid state workers that have enough years under their belts to get both guaranteed pensions and health insurance during their entire retirement. Think of how much that will be worth! This was mainly an exercise in curiosity, and I’m glad I did it.
Finally, it’s not how much you earn, but how much you keep.
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hey jonathan –
i frequent your blog often and have found it useful more than once.
here’s something you might be interested in…if you have done any foreign transactions since last few years…check this out…and may be blog it if you wish
link
i got a similar settlement claim with my citi statement and was wondering if this works or not..
ha, I literally was just about to publish my post on the exact same topic. See the next post 🙂
this was a great little analysis that you came up with. as you mentioned, its not scientific but does give you a good indication that making a large salary is possible in MANY positions and areas of the country.
When using the calculator (CNN), i think they take the average person have 2 kids going to school, dog, minivan etc…
I see the evidence of this state worker success. I know two who retired at ages 57 and 58. Pay is low but the perks keep people in the job which creates a nicer work environment too. Workers know each other for years and are not all about competing with each other. There is more friendship and working together. They aren’t all waiting for the axe!
I’m surprised you used SF as your base for comparison.
Take a look at the CNN calculator and you’ll see that those living in Manhattan pay a further 25% HIGHER than SF prices (100k in Manhattan = 80k in SF = 46.4k in Atlanta).
Housing is almost 30% less in SF than in Manhattan, and utilities are almost half the cost.
Also, one point to consider when analysing your pie chart of professions is selection bias for your sample. People doing non tech inclined jobs might tend not to surf the internet (or blogs) as much.
The median household income of NYC is only about $40,000, while the median household income of the SF Bay Area is $70,000. Even in Manhattan, the median household income is only $47,000. The survey was about six-figure salaries, and the SF Bay area has the highest percentage of people earning six-figure salaries in the entire country.
That, and I lived there 🙂
There is definitely selection bias on this blog. That’s why I said it’s not scientific and could not make any conclusions regarding profession. The only conclusion is that there are lots of ways to make six-figures if you pursue it.
As a matter of fact, most people who work in Manhattan live in New Jersey/Queens/Brooklyn/Upstate NY. As in other cities, people live away from the city center.
So, the cost of living calculator can only apply to people who live at where they work…
Speaking as an Atlantan, I find myself feeling a little bit richer right now.
I am an Indian. Let me Know how to make 100000$ per annum.
This info would be great to share with those in our Congress who think that making 6 figure salary instantly defines you as rich. If you make $200k in SF a tax increase on your family impacts your standard of living significantly. So much for soaking the “rich.”
I live in the suburbs(ventura county )of L.A. and 100k a year is not much…you are living slim on that amount!
Figured I would add to the blog.. I’m 25 in my 5th year in the banking world (Mortgage Banking to be exact). I’ve made over six figures since I was 23 and hope to continue that tread in the future. Additionally my success comes from my strong skills in sales, interpersonal relationship development and the dedication of working non stop until the job is done. 80-90 hour work weeks and sleepless nights are more common than I would like to admit; however my success is measured on how much of an impact I have on my clients and co-workers. That’s my .02 cents.
If you are working 80-90 hour days and making 100k, it’s like 45-50k for a normal work week. Gotta weigh and balance time for hobbies, family, relationships, and relaxation. Sheesh don’t kill yourself…. There are better ways to do things my friend.
Great post. Money isn’t what it use to be that is for sure. Compared to these charts I’m in the wrong job field 🙂 I work as a web designer however I’m probably under paid compared to most, but just thankful I have a job.
That is a pretty amazing thing though that $100k In San Fran. is only about like earning $58k in Atlanta.
Interesting subject and analysis. I am a married Engineer and when I was working crappy jobs through school 2 years ago I though 100k would be all I ever needed. Now with 2 kids I will agree that 100k a year is not much at all, even in a relatively low cost of living area like Colorado. I am definitely not suffering but it should never set the threshold for rich. The company I work for maintains headquarters in Silicon Valley, CA (San Jose) and even though my equavalent position there would likely make 10-15% more, I think they are still getting short-sided. I bought a 3000 sf 4 bedroom house in 2007 for $220,000. An equavalent home in the bay area would push 600k-1M, though that was before the recent bust and your commute would be 10x longer. You are right Jonathan, it is not what you make, but what you keep. And it will get harder to keep as we ambitious people strive for more and Obama takes it away.
I found this after wondering just how many of those people I hear or read about making “six figures” are actually doing it. As it turns out, not that many. As a self-employed designer, my income has ranged from $65k to $98k over the past 10 years. But we live like I make $50k. We’ve been able to pay off two houses, the current one now valued at over $700k (thanks to the real estate boom) and have close to $300k in cash (in ultra-conservative CDs or similar investments). So you’re right. It is about what you keep.
I would like to disagree with those in new york or san francisco that think that they are not rich. You are forgetting two things:
A) The cost of living takes into account intangible amenities like weather and proximity to desirable locations. This has to be “paid” for, so it makes sense that a San Franciscan should feel poorer from a numerical standpoint than an Atlantan. You are still taking advantage of these amenities, which you should add to your income.
B) You can always sell your house and bank your home equity, which will be more on a higher San Francisco mortgage payment than on a lower Atlanta mortgage payment. If both a San Franciscan and an Atlantan moved to Omaha, the San Franciscan would have higher standard of living.
For those of you out there that are earning $100,000+ think about this: – Most six figure income earners work 50, 60, or 70+ hours per week to earn their so-called high status income. The real test for success is whether one can earn 100,000+ working only a standard 40-hour week. Question – is it worth the struggle to work long hours to pull down 100K especially when in most areas of the U.S. 100K is not that much money in terms of purchasing power? – So much for status.
I think that people should be more concerned with what their net worth is than with what their salary is. A lot of people that make six figures or more have terrible spending habits. I am single and 41 and have consistently made six figures for the past 7 years. I almost hit 200k a few years ago but average about 150 and I also get a company car, free car insurance, free gas, free home and cell phones, free fax line and get to expense most meals since I travel a bit (I’m in sales). I could go into the 250k sales if I wanted but they have to be on call 24.7-keep beepers on for holidays and weekends and have early morning calls regularly. I have many days my first appt isn’t til lunch and I have lots of flexibility in my schedule-so I’m looking to make it to 250k in a little easier more laid back way. I don’t at all feel rich and agree with others that 250k is my goal for comfort but I have had made sacrifices and not developed a lavish lifestyle and now have two homes almost paid off that have a value of over $600,000-that coupled with my 401k and investments I will be officially a millionaire in just a few years and that is just working an average job and being smart with my money. I hope to invest in rental properties next and live off the rental income in my retirement. I also plan on writing more and getting some books published on the side to have supplemental income. I agree living in a state with no state income tax is a boost and I plan to move to one of those with my next promotion. Once I start writing I can write off a lot of taxes since that will be my own business and that is key to when you go up the income range is how you manage your taxes-the rich DON”T pay taxes and if you are just a drone making six figures and giving 30% to the govt you are getting nowhere fast-get a self employed job where you can write off most of the taxes and then you will truly get rich. Going back to networth-there are plenty out there-even some guys I know on Wall Street that have made and lost millions over and over again and have never had the consistent net worth I have had. I even know singers and celebrities that made millions and lost it all-it is all in how you handle your money and looking back I would have probably even had more fun and worked less-money isn’t EVERYTHING!
are u single?
I make 140 000$ as an executive pilot (co-pilot still) flying for a very wealthy man. On top of it we get very high allowances so you can even save up to an extra 2000$ a month meaning I make up to 164000$ more or less. I fly a very large private jet and admit, I am definitely being paid on the very rare high side. I do not fly for Netjets or Execujet or any of those, they earn about half what I earn. I simply fly for a multi billionaire.
The good thing about my job is that with this person, I am usually only gone on an average of 7 days a month, meaning, the other 3 weeks I get to spend with my wife, doing blacksmithing (my hobby), train dogs (other hobby) and do my kitesurfing 🙂 I also used to do flight instructing but the stress was simply not worth it anymore for making an extra 1200$ max each month, so I regret having spent 10 000$ for that training 🙁
Anyway, I like my job and am also participating in other projects, such as ownership of cattle (for selling meat), I own 10% of a very upscale restaurant and am investing also in a having my own gym but for that I need to save up some more.
Executive pilot jobs come and go so I want to make sure I get enough income if I am ever faced with losing my job (owner wanting to get rid of airplane or God knows what) and I also do not want to fly after I reach 45 years of age. I am 28 at the moment and am in this executive aviation since 3 years.
Again, I am part of the 1% of the pilots that got their dream job, the other 99% at least the ones in the airlines make about half what I make speaking of a copilot salary.
Captain salary is expected to go 250 000$ a year, with allowances that you can save up an additional 24 000$ so 274 000$.
I can live with both 🙂
I call bullshit. What type of aircraft do you fly? What’s the N #? Just because the owner is ultra wealthy doesn’t mean he’s going to pay his pilots 35-50% over market rate. Also, for that kind of money going to a co-pilot, he could hire a much more qualified and experienced pilot them a 28 year old. Sorry, your story doesn’t add up.
Based on your experiences and the people you know his story doesn’t hold up. That does not mean it’s not true. I’m sure it would hold up in the mind of people who earn a lot more than you do or he does. How many billionaires or for that matter millionaire s do you associate with?
Well , no matter how much you make once your in the top tax bracket it doesn’t matter if you make 215k or 750 k you still get taxed the same. On paper I make over 105k but in net its much much less. Once I get done with my requirements and start making 350k+ then I still wont take in what I expect. Still its not about money its about being happy and I want to spend time with my family see my children grow up and can only do that if I bust myself for a few years and save all that I can untill I feel ready to retire and spend time with them. We live off of my wife’s salary right now who is a CPA (about 73k it varies )and save my salary . My house was 75k ( live in texas so its cheap) we have two not so great vehicles(not extremely high end) but we dont need anything else we are happy how we live we take vacations we have fun we enjoy life, thats what it should really be about. I always enjoy reading your blogs.
Geesh. Every post on the web about savings, retirement, salary, etc. inevitably ends up with people bragging about how much they supposedly make, have saved, etc. “I’m 12 and I make $150K in my lemonade stand and have amassed a fortune in my Schwab account”. I don’t give a rat’s a$$ how much you have saved, how much your house is worth or anything else about you. I’m simply curious of the percentage of people who make $100K or more a year.
I’m an investment banker in new York. I’m 28, and I made 300k last year. But with 4k a month in rent, suits and the life and stress….I don’t feel rich at all. But I love the competition and prestige. 50k in Atlanta….comfortable or not is no life for me
I am a police officer in a city in eastern Pennsylvania. The cost of living here has risen tremendously over the past few years, with more and more commuters to nj and nyc moving here. With my base pay, college bonus and a little overtime I earn over 100k per year. I don’t feel rich either. With a 3k mortgage, child care, etc the money goes fast.
I’m a commercial mortgage administrator. I live in Toronto and make about $37K a year. I’m currently trying to pay down a mortgage for a little condo I have in downtown. I want to someday save the world, and it seems like I first need to be rich in order to do that, so that I can quit my full-time job and fully devote my time and energy to this endeavour. Do any of you have any ideas of how I can quickly get rich? Your thoughts will be greatly appreciated.
“The cost of living takes into account intangible amenities like weather and proximity to desirable locations.”
That’s a good point. I live in the San Francisco Bay Area and definitely pay a premium for ‘weather and location’ in high housing, food, and gasoline costs. Despite the fact that I could easily afford a home in other areas of the country, I choose to live here and rent.
I also regularly work 60+ hour weeks to eek out my $100K.
12 years with a fire rescue department here in South Florida. Will gross 106,000 this year. That’s with only 100 hours of overtime. Work hard….get compensated well. After 25 years of service get 80% of my salary with 3% COLA every year for life. The hard part is getting their with your sanity and health in good condition
im a hardworking, ambitious, and savvy late 20’s male living in sf. i doubled my income each year for 4 years since college at my first job (in finance). i made 500k last year, but leaving about 225k to the gov’t because i’ve triggered 35% federal marginal tax bracket and 9.3% CA marginal tax bracket. it’s pretty hard to max out tax deductions because i’m not married, don’t own a home, etc. i probably think about money more than 99% of the people out there, which is probably related to my level of compensation. my level of contentment with life has nothing to do with my changing income, trust me. although i love that i can work 35hrs a week, make a very healthy living, and have the flexibility to focus on enjoying life… i’m still unfulfilled in many ways. unfortunately this is probably tied to my craving for MORE. what’s enoguh? a little more. it’s a sad fact. it’s more vital to strive to do something you love… your passion… because if you become successful it will be significantly more enriching and rewarding. money is a necessary evil, yes, but once you have plenty it is just convenience. save what you need for the future, target your spending on the things you want and can afford, and make sure to remember that you are the only one holding yourself back from making it. also note … you gotta crawl before you ball
I am 23 and make 250k a year pre tax. I started out grilling at McDonald’s. I climbed the ranks and now own 10. I am also 6’5″ (face it, if you’re under 6’2″ you’re too short to be successful), I run triathlons, race f1 as a hobby, and my genitals are exceptionally large.
I mike 100k a year but if you add in bonus, 401(k) Match, Cash Balance and Pension Contibutions to my retirment plan I earn >120k a year. I am 45 years old and started in the my profession at age 20 in 1986 for about 14k a year. I will be able to retire at Age 55 on about 60%of my final average earnings plus SSA paymets at Age 67. However My household income is nearly 200k if you add in the 70k my spouse earns as a physical therapist. My wife and I both have Masters degrees and have studied and worked to be successful. However add in the cost of Housing in Metro West Boston where we reside small houses in atown with good schools cost about 400k to start and fixer uppers can cost $500k. Expect to pay 600k to 700k for somthing average and nearly a million for something nice add in 3 kids college tuitions for 600k and you will see that 200k income means nothing in New England and most of the eastern seaboard from DC to Portland ME in the major metro area you need at lest 200k to live and 300k to live well.
For all those looking for something a little different to help pay down bills try this out. It’s worked for me. I’ve paid off a car and my truck will be paid off shortly. http://www.123setyourfree.com
I made 140k last year with salary + bonus +OT. I only work 40-45 hours a week, I work with computers networks for a big fortune 500 company.
I live in Seattle, this place is not very cheap , but is not too expensive like California. I have four kids and we are not a fancy family. We have two old cars and big house. Total equity with investments in real state, stock, gold, silver and cash is about 500k.
I am rich because I choose to have a family, I could not have done this as a single man like some of you. So having a family is a huge expense but I see it as necessary investment for my future and my sanity and happiness. I would probably not care about saving if I hadn’t have a family.
My goal is to duplicate my income in the next 5-10 years. How am I going to do that? I think Real State is the easier one but I am always trying to find ways to save money for example I look on craigslist first before I buy new things I need.
I also looking at business opportunities and talk to my friends and learn what they are doing to save money.
Getting rich is a process and a life long commitments and it is an accumulation of several small choices that might or not give you a positive result in the end, being rich is living with less than you make and saving as much as possible for the worst.
remember the rule of 72 basically what it says is if you have an investment that pays 6% divide that into 72 equals 12 that means in 12 years you will double your money, if % paid 8% than divide into 72 your money would double in 9 years. my point is that you can make good money while not taking a huge risk,,,such as real estate…many conservative funds will pay these dividends. Be wise with your hard earned money.
I immigrated to the U.S. / NYC From Europe in late 1999 at 27. By then, I had earned a BA in Finance, a degree in EE, and had mastered the English language. Never worked a day in my life before landing on these shores. Fought in a war at the tender age of 19 back in the old country. The 1st job was a Wall Street consultancy: 35k, and then 40k a year, 1999-2003. In my 3rd job now (not counting the short stint at a very large investment bank: I thought I didn’t like it and left/returned to my old/current job after a few weeks…), and have been at it since 2005: I work at a very large international brokerage firm (fixed income & derivatives trading systems technology), and will be 41 later this year (2013). I am making a total of $126k and have been making that amount for 3 yrs, and 103k or more since Jan 2007. Single, never married, no kids, renting ($1,100/month the past 6 yrs, $450/month the first 8). Cash in the bank is ~425k now. Came to U.S. with $9,068 in my pocket. Only in recent years I started going out, travelling and enjoying life. But it’s got more to do with my not caring much about the usual ways of having “fun”. I’m content with reading, silence, hanging around a couple of friends who “get it”, and quiet contemplation. Although I sometimes choose to stay at work for longer than 8 hours, it’s not a requirement or obligation or necessity of any sort at my job. The tax situation in NY is ridiculous (8.875% sales tax on top of everything). I also resent having to support – through confiscation of my wealth – the lazy, the violent, the stupid strata of the population here. And their political enablers – co-conspiring symbionts on local, state and “federales” levels. Never been sick and now resent having paid so much money in health insurance over the past 13-14 years that I really could have used in better ways. I don’t own a car or even a cable tv. Next step for me is a minimum 150k/year job at some sort of Wall Street securities-trading or trading technology shop in Manhattan or Jersey City (Connecticut is too far away and a commuting nightmare).
I’m 18 and make $600,000 per year. I’m extremely good looking and the girls adore me. I drive the best Mercedes money can buy. I live in a mansion. I have a yacht and speed boat. I take lavish vacations 5 times per year. I eat the best of foods. The rest of you are suckers.
We are one of the richest countries in the world. EVERYONE count your blessings! Get over it.
This is a pretty good article. I’m researching 100k salaries right now for a blog I’m writing and just happened upon this. I like what you have to say about total compensation, and it leads me to consider writing a little about contract/consulting work that may pay that much but leaves you paying for all of your compensation vs. a government position. I look forward to seeing more of what you have to say about money, as most of us have to work a job to have it, but it doesn’t have to translate to “just over broke” if we do the work to find a good overall package that’s right for us.
Today, 100k is not considered being rich anymore.
A 6 figures salary should be considered OK, it is not a big deal.
$100,000 dollars in 1965 has the same buying power as $741,927 in 2015.
http://data.bls.gov/cgi-bin/cpicalc.pl