A household bringing in $100,000 each year should be on firm financial footing. But depending on where you live, that amount might be barely enough to scrape by — or might not even be enough to cover the basics. Taxes, housing, transportation and other typical expenses can easily eat up six figures a year in certain cities, leaving families strapped for cash, according to a recent analysis by MagnifyMoney.
For this study, we looked at data from the U.S. Department of Housing and Urban Development (HUD)’s Location Affordability Index (updated in March 2019), which also uses data from the 2012-2016 American Community Survey, to see which cities would leave a dual-professional households earning $100,000 with little to no disposable income. We considered the average cost of housing (e.g. insurance and taxes), transportation (e.g. car payments, parking, tolls, bus fare, etc.), childcare, food, retirement contributions, utilities and other line items in a typical family’s budget.
After tallying up all of the expenses, we were able to calculate the disposable income of families living a typical six-figure lifestyle in various metro areas around the United States. Then, we ranked the top cities where families earning $100,000 a year would have the least (and most) amount of money leftover at the end of the month. Here’s what we learned.
Image Credit: DepositPhotos.com.
Key takeaways
- In San Jose, Calif., considered the capital of Silicon Valley, a joint income of $100,000 with a preschool-aged child means a couple may have to run up their credit cards $1,046 a month just to cover what the typical two-earner household spends on the basics (not including compounded interest on that credit card debt).
- In seven of the 100 metro areas we reviewed, the average professional couple spends more than $100,000 on the basics.
- In McAllen, Texas, a couple earning $100,000 can expect to have around $1,795 left over every month after paying the typical bills for a local dual professional household.
- Seven of the 10 places where couples can expect the most disposable income are in Texas, Florida and Tennessee, where there’s no state income tax.
- More than half of married couples have six-figure incomes in 19 of the 100 metros we reviewed.
Image Credit: DepositPhotos.com.
Methodology
The hypothetical family we created is a typical one that earns a combined income of $100,000 (the average income for a married-couple family in 2017 was $110,786 (the median was $85,031), and 41% of such couples earned at least $100,000 that same year).
We were conservative about the couple’s financial and debt obligations by making the following assumptions:
- Both have corporate-style employers who offer typical benefits.
- They have one child currently in day care.
- Between them, they contribute 6% of their income to their 401(k)’s to maximize typical matching, which is considerably less than the median rate of 10% from an employee in a matching plan (page 7).
- Only one of them has student loans and is making the average payment of $393 a month. (Student Loan Hero and MagnifyMoney are both owned by LendingTree.)
- The entire household is on one person’s group insurance plan.
- The family has average spending habits and expenses for where they live.
To calculate federal and state taxes, we assumed the following:
- The couple will file jointly for 2019;
- Took the standard federal deduction;
- Received a federal $2,000 credit for their one child
- Took the standard deductions and credits offered by their state;
- Took advantage of the pre-tax DCFSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer;
- Had insurance premiums paid from their pre-tax income by their employer;
- Had their 401(k) contributions paid from their pre-tax income by their employer.
The following variables were used to create their hypothetical expenses (each is the average cost for the geography indicated in parentheses):
- Federal tax contribution (national, but adjusted for state average health care premiums)
- State tax contribution (state)
- FICA contribution (national)
- 401(k) contribution (national; see notes on assumptions)
- Insurance premiums for family coverage (state)
- Housing costs for dual professional families (MSA)
- Transportation costs for dual professional families (MSA)
- Food costs (regional)
- Utilities cost (regional)
- Household operations, housekeeping supply, and apparel costs (regional)
- Child care costs (MSAs where available (half of the MSAs), and state averages where not)
- Student loan payments (national)
Sources include the Bureau of Labor Statistics; the Department of Housing and Urban Development; the Tax Foundation; Care.com; the Kaiser Family Foundation; the U.S. Federal Reserve; and the U.S. Census Bureau.
Image Credit: DepositPhotos.com.
25. Sacramento, California
% of married couples who make over $100K: 40.8
Monthly disposable income: $514
Federal taxes: $393
State taxes: $205
FICA: $638
401(k): $500
Health insurance: $447
Housing: $1,679
Transportation: $1,330
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $871
Student loans: $393
Image Credit: DepositPhotos.com.
24. Chicago
% of married couples who make over $100K: 49.5
Monthly disposable income: $512
Federal taxes: $401
State taxes: $320
FICA: $638
401(k): $500
Health insurance: $380
Housing: $1,849
Transportation: $1,213
Food: $618
Utilities: $320
Household, housekeeping and apparel: $247
Childcare: $944
Student loans: $393
Image Credit: DepositPhotos.com.
23. Raleigh, North Carolina
% of married couples who make over $100K: 50.4
Monthly disposable income: $490
Federal taxes: $389
State taxes: $276
FICA: $638
401(k): $500
Health insurance: $486
Housing: $1,795
Transportation: $1,397
Food: $602
Utilities: $330
Household, housekeeping and apparel: $253
Childcare: $785
Student loans: $393
Image Credit: DepositPhotos.com.
22. Salt Lake City
% of married couples who make over $100K: 42.1
Monthly disposable income: $466
Federal taxes: $403
State taxes: $346
FICA: $638
401(k): $500
Health insurance: $365
Housing: $1.819
Transportation: $1,322
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $718
Student loans: $393
Image Credit: DepositPhotos.com.
21. Los Angeles
% of married couples who make over $100K: 45.9
Monthly disposable income: $465
Federal taxes: $393
State taxes: $205
FICA: $638
401(k): $500
Health insurance: $447
Housing: $1,795
Transportation: $1,166
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $968
Student loans: $393
Image Credit: DepositPhotos.com.
20. Madison, Wisconsin
% of married couples who make over $100K: 49.3
Monthly disposable income: $449
Federal taxes: $399
State taxes: $373
FICA: $638
401(k): $500
Health insurance: $404
Housing: $1,666
Transportation: $1,341
Food: $618
Utilities: $320
Household, housekeeping and apparel: $247
Childcare: $987
Student loans: $393
Image Credit: DepositPhotos.com.
19. Philadelphia
% of married couples who make over $100K: 54.1
Monthly disposable income: $417
Federal taxes: $393
State taxes: $208
FICA: $638
401(k): $500
Health insurance: $448
Housing: $1,875
Transportation: $1,258
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $848
Student loans: $393
Image Credit: DepositPhotos.com.
18. New Haven, Connecticut
% of married couples who make over $100K: 53.4
Monthly disposable income: $361
Federal taxes: $393
State taxes: $215
FICA: $638
401(k): $500
Health insurance: $452
Housing: $1,716
Transportation: $1,300
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $1,012
Student loans: $393
Image Credit: .
17. San Diego
% of married couples who make over $100K: 48.4
Monthly disposable income: $356
Federal taxes: $393
State taxes: $205
FICA: $638
401(k): $500
Health insurance: $447
Housing: $1,827
Transportation: $1,284
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $926
Student loans: $393
Image Credit: DepositPhotos.com.
16. Seattle
% of married couples who make over $100K: 55.1
Monthly disposable income: $280
Federal taxes: $400
State taxes: $0
FICA: $638
401(k): $500
Health insurance: $388
Housing: $1,997
Transportation: $1,321
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $1,052
Student loans: $393
Image Credit: DepositPhotos.com.
15. Albany, New York
% of married couples who make over $100K: 51.2
Monthly disposable income: $272
Federal taxes: $388
State taxes: $299
FICA: $638
401(k): $500
Health insurance: $490
Housing: $1,717
Transportation: $1,366
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $916
Student loans: $393
Image Credit: DepositPhotos.com.
14. Portland, Oregon
% of married couples who make over $100K: 45.8
Monthly disposable income: $222
Federal taxes: $397
State taxes: $424
FICA: $638
401(k): $500
Health insurance: $417
Housing: $1,722
Transportation: $1,298
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $959
Student loans: $393
Image Credit: DepositPhotos.com.
13. Denver
% of married couples who make over $100K: 51.7
Monthly disposable income: $198
Federal taxes: $394
State taxes: $229
FICA: $638
401(k): $500
Health insurance: $439
Housing: $1,902
Transportation: $1,312
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $965
Student loans: $393
Image Credit: DepositPhotos.com.
12. Hartford, Connecticut
% of married couples who make over $100K: 57.1
Monthly disposable income: $182
Federal taxes: $393
State taxes: $215
FICA: $638
401(k): $500
Health insurance: $452
Housing: $1,924
Transportation: $1,350
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $932
Student loans: $393
Image Credit: DepositPhotos.com.
11. Baltimore
% of married couples who make over $100K: 58.6
Monthly disposable income: $174
Federal taxes: $387
State taxes: $270
FICA: $638
401(k): $500
Health insurance: $504
Housing: $2,100
Transportation: $1,296
Food: $602
Utilities: $330
Household, housekeeping and apparel: $253
Childcare: $887
Student loans: $393
Image Credit: DepositPhotos.com.
10. Minneapolis
% of married couples who make over $100K: 54.3
Monthly disposable income: $149
Federal taxes: $397
State taxes: $439
FICA: $638
401(k): $500
Health insurance: $417
Housing: $1,953
Transportation: $1,342
Food: $618
Utilities: $320
Household, housekeeping and apparel: $247
Childcare: $922
Student loans: $393
Image Credit: DepositPhotos.com.
9. Worcester, Massachusetts
% of married couples who make over $100K: 52.0
Monthly disposable income: $114
Federal taxes: $391
State taxes: $310
FICA: $638
401(k): $500
Health insurance: $464
Housing: $1,779
Transportation: $1,376
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $1,012
Student loans: $393
Image Credit: DepositPhotos.com.
8. New York
% of married couples who make over $100K: 54.8
Monthly disposable income: $65
Federal taxes: $388
State taxes: $299
FICA: $638
401(k): $500
Health insurance: $490
Housing: $2,109
Transportation: $1,082
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $1,014
Student loans: $393
Image Credit: DepositPhotos.com.
7. Oxnard, California
% of married couples who make over $100K: 53.7
Monthly disposable income: -$195
Federal taxes: $393
State taxes: $205
FICA: $638
401(k): $500
Health insurance: $447
Housing: $2,124
Transportation: $1,532
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $933
Student loans: $393
Image Credit: DepositPhotos.com.
6. Honolulu
% of married couples who make over $100K: 52.1
Monthly disposable income: -$1206
Federal taxes: $400
State taxes: $407
FICA: $638
401(k): $500
Health insurance: $393
Housing: $2,057
Transportation: $1,385
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $1,003
Student loans: $393
Image Credit: DepositPhotos.com.
5. Bridgeport, Connecticut
% of married couples who make over $100K: 64.2
Monthly disposable income: -$487
Federal taxes: $393
State taxes: $215
FICA: $638
401(k): $500
Health insurance: $452
Housing: $2,423
Transportation: $1,496
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $955
Student loans: $393
Image Credit: DepositPhotos.com.
4. Boston
% of married couples who make over $100K: 61.9
Monthly disposable income: -$510
Federal taxes: $391
State taxes: $310
FICA: $638
401(k): $500
Health insurance: $464
Housing: $2,179
Transportation: $1,366
Food: $709
Utilities: $345
Household, housekeeping and apparel: $302
Childcare: $1,247
Student loans: $393
Image Credit: DepositPhotos.com.
3. San Francisco
% of married couples who make over $100K: 63.3
Monthly disposable income: -$631
Federal taxes: $393
State taxes: $205
FICA: $638
401(k): $500
Health insurance: $447
Housing: $2,392
Transportation: $1,342
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $1,290
Student loans: $393
Image Credit: DepositPhotos.com.
2. Washington, D.C.
% of married couples who make over $100K: 66.7
Monthly disposable income: -$700
Federal taxes: $386
State taxes: $284
FICA: $638
401(k): $500
Health insurance: $505
Housing: $2,677
Transportation: $1,461
Food: $602
Utilities: $330
Household, housekeeping and apparel: $253
Childcare: $1,005
Student loans: $393
Image Credit: DepositPhotos.com.
1. San Jose, California
% of married couples who make over $100K: 66.5
Monthly disposable income: -$1,046
Federal taxes: $393
State taxes: $205
FICA: $638
401(k): $500
Health insurance: $447
Housing: $2,760
Transportation: $1,416
Food: $740
Utilities: $328
Household, housekeeping and apparel: $297
Childcare: $1,265
Student loans: $393
Image Credit: DepositPhotos.com.
Understanding the metrics
There are a few changes to the methodology in our 2019 study. We focused on the largest 100 metros this time around as opposed to some 381 metros last year. We also took a more detailed approach to calculating variables that impact a family’s disposable income.
We based our case study on a family earning a gross income of $8,333 per month. Then we subtracted their monthly expenses, debt obligations and savings to come up with an estimate of how much cash they’d have left over at the end of the month.
These are the assumptions we made for this study:
Savings. We assumed the family contributed $500 monthly to their 401(k). In previous years, we assumed the family set aside 5% of their savings in a regular savings account. This year, we changed the savings to 401(k) contributions because it’s something of a bastion of corporate middle-class personal finance, and it offers a tax benefit.
Tax assumptions. Our study assumes the couple will file jointly for 2019. They took the standard federal deduction and received a federal $2,000 credit for their one child. They also took the standard deductions and credits offered by their state, and took advantage of the pretax Dependent Care FSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer. The couple had insurance premiums paid from their pretax income by their employer and their 401(k) contributions paid from their pretax income by their employer.
Debt. We assume the family had a monthly student loan payment of $393 — the median student loan payment according to the Federal Reserve — in order to be consistent with the other metrics (which also look at the mean). Housing and auto debt are bundled in with the housing and transportation cost budget line items in monthly expenses.
Monthly expenses. We based monthly expenses — housing, transportation, food, utilities, household operations, child care and entertainment — for each location on data taken from the Bureau of Labor Statistics, the Department of Housing and Urban Development, Care.com, Kaiser Family Foundation and the Federal Reserve. We calculated an average for these expenses taking into account the lifestyle costs of a six-figure earner. We also removed entertainment and combined household expenses with housekeeping supplies and apparel. The cost of apparel is the average amount for a woman, man and child under the age of 2 in each metro.
Compared with last year, we beefed up the monthly necessity expenses — although by no means hit them all — by adding costs like household operations costs and utilities to get a more realistic sense of how much people would have left over after paying their basic bills.
Unfortunately, we haven’t located updated childcare costs compared to last year, so that remains the same in our numbers, but is likely to have increased. We’ve also added the average (mean) income for married couples in each metro, as well as the percentage of married couples in each metro with incomes over $100K.
Further, while the median cost of each expense would have painted a more accurate picture of what half the population experiences, this data only included the average, or mean, of the metrics, so the results may overstate what typical people earn and pay, especially for housing and transportation. With that being said, we recognize we may be lowballing some expenses a typical family faces. For example, our data on health insurance includes monthly premiums, but not copays for visits to the doctor and the cost of prescription drugs.
This article originally appeared on MagnifyMoney.com and was syndicated by MediaFeed.org.
Image Credit: DepositPhotos.com.
