What a Six-Figure Salary Could Buy in 2016 vs. Today
KEY TAKEAWAYS:
Due to inflation, earning six figures is obviously not what it used to be
Location and lifestyle also affect the value of six figures
Three major common expenses tend to eat up a six-figure salary most
Six figures used to sound like a ticket to comfortable living. Earn $100,000 and you could live well, save without sweating and still have room for a little fun. For a lot of people, that feeling is harder to find now, and it’s not just your imagination.
Rising costs are the culprit, and they haven’t hit everyone equally. Depending on where you live and how you spend, that income may not stretch as far as you’d expect. Let’s see how a six-figure salary compares then in 2016 versus now.
Find Out: How Far a $50K Salary Went in 2006 vs. Right Now
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Inflation Has Quietly Shrunk Your Paycheck
Just look at the average annual expenditure over the years. In 2016, the BLS Consumer Expenditure Survey found that the average household spent $57,311 annually. By 2024 (the latest data available), that figure climbed to $78,535, a 37% jump.
Inflation is the main driver. A $100,000 salary from a decade ago would need to be about $139,000 today to buy the same goods and services, assuming you didn’t take on new debt or upgrade to a pricier home.
What this means, ultimately, is that prices are around 39% higher than they used to be. This isn’t far from what the BLS data shows.
Where You Live and What You Buy Changes Everything
Costs have risen much faster in some parts of the U.S. than others. According to the Official Data Foundation, here’s what a $100,000 salary would need to look like to maintain a certain lifestyle in major metropolitan areas over the decade:
San Diego, CA: 57.20% cumulative inflation ($100,000 to $157,203)
Miami-Fort Lauderdale, FL: 46.85% cumulative inflation ($100,000 to $146,854)
Seattle, WA: 47.55% cumulative inflation ($100,000 to $147,550)
Atlanta, GA: 44.23% cumulative inflation ($100,000 to $144,233)
Phoenix, AZ: 42.70% cumulative inflation ($100,000 to $142,702)
Prices of certain services and goods also don’t rise equally. Over the decade, here’s how much certain everyday items have risen:
Gas: from $1.97/gallon to $3.29/gallon
Eggs: from $2.33/carton to $3.59/carton
Electricity: from $0.13/kWh to $0.19/kWh
That’s an increase of 67% (gas), 54% (eggs) and 16% (electricity). These are all way above the average inflation rate over the decade. However, not everything has increased that rapidly. Categories like apparel, recreation, education and even medical care have risen at a much slower rate than the average.
The Big Expenses Eating Your Paycheck
According to the Foundation, certain budget categories have risen faster than the average inflation rate since 2016. The four biggest ones are:
Housing: up 46.33%
Transportation: up 46.37%
Groceries: up 39.36%
Other goods and services: up 42.49%
Housing is the clearest example. According to FRED, the median sales price of a new U.S. home is now $410,700, up from $306,000 in 2016.
Cars are no kinder. Kelley Blue Book estimates the average new vehicle now costs $49,855, compared with $34,372 in 2016. That’s a 45% jump before you factor in insurance, maintenance or gas.
What’s Left for Your Retirement Fund
Rising costs make it harder to save or invest, even on a six-figure income.
Start with a rough comparison before taxes. In 2016, a $100,000 salary minus roughly $57,000 in average spending leaves about $43,000. Today, the same salary minus $78,000 leaves about $22,000.
Taxes take a bite too. Fidelity estimates that a $100,000 salary today comes with about $16,914 in income tax. After average living costs, that leaves a little over $5,000 for investing. Tax brackets have shifted over the decade and vary by state, so the 2016 figure would also shrink once taxes are included. Still, the gap is hard to ignore.
The Bottom Line
A six-figure salary still puts you ahead of many households, but it doesn’t buy what it used to. If retirement is the goal, start by tracking where your money goes. Target the biggest drains first (housing, transportation and groceries), and treat investing like a fixed monthly bill instead of whatever’s left at the end of the month.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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