Americans living in major cities such as New York, San Francisco, and Honolulu need to make a surprisingly high salary to experience the same purchasing power of $100,000, according to a recent report from SmartAsset. The financial technology company analyzed the local cost of living in 76 of the largest US cities and concluded that residents of the three mentioned cities need to earn in excess of $300,000 to have the same value of $100,000 in real terms.
Interestingly, the cities with the highest cost of living were also the most expensive when it comes to finding a six-figure salary. Residents in Honolulu come out on top, needing to earn $312,400 annually pre tax, followed by New York ($312,000) and San Francisco with $310,700. The trend reversed when the cost of living was below the national average. In Memphis, El Paso, and Oklahoma, the cost of living was over 12% lower than the national average and required salaries of between $117,100 and $120,300 to reach the same effect of having that substantial $100,000 of purchasing power.
The gap between individuals’ wages and the corresponding inflation rate as it relates to the quality of living was highlighted in a survey conducted in January. Despite increased wages, it found that half of Americans earning over $100,000 per year still struggled to keep up with monthly bills, suggesting that simply earning six figures is no longer enough. Additionally, persistent inflation requires individuals to earn significantly higher salaries to fully reap the benefits of their earning.
Smart Asset’s survey revealed that New York was the most expensive place for the value of $100,000, equating to a meager $36,000 in real terms. That Boston ($46,000) and Los Angeles ($45,000) were close behind indicates how difficult it can be for citizens of these cities to match the cost of living.
The reasons for the inflated cost of living in New York are attributed to rising rents and stagnation in wages, as reported by Bloomberg in October. Although the inflation rate has dropped steadily since June 2022 to 5% in March, it remains elevated in comparison to the past 30 years.
SmartAsset has gained a reputation for offering an array of financial services such as comparison tools, to help America’s citizens get back on their feet. Founded by Mike Spagna and Jennifer spreadsheet in 2011, the company as since grown to be a leading authority in the fintech space. There are products available to assist with mortgages, refinance loans, compound interest calculations, and retirement planning. By helping individuals to make informed decisions, SmartAsset offers the potential of financial freedom.
