NPR: what living on $100,000/year looks like

[Paul der Krake]

https://www.npr.org/2017/12/03/567602293/what-living-on-100-000-a-year-looks-like

Wah wah wah

[ixtap]

No mention of the size of house or type of car, I see.

[RWD]

Credit card debt, that thing that just sneaks up on you completely outside of your control...

[TempusFugit]

"People whose upper-class salaries are not keeping pace with their upper-class standards of living, Tankersley says, are often experiencing a lingering effect of the 2008 financial crisis."

"I was really surprised because from the outside, it looks like we have plenty of money..."

Well, there's your problem right there.   


And this attitude here..

"But what I've learned in moving to the coast is there's real inequality. And the biggest driver of that inequality is the tax code. The biggest social welfare has been to the rich and powerful, giving them loopholes and abilities to keep money from the government and keep money from the rest of us."  [emphasis added]

What's that all about?  This dude is banking 100K and sounds like he wants a cut of other people's money too. 

That doesn't mean he's completely wrong about some of the benefits that go to rich people, but this guy doesn't sound like he actually knows anything about the technical details, just the general grievance industry.

And those breaks that go to rich people: like mortgage deductions?  Like state income tax deduction from federal taxes? Those benefits?  That he no doubt takes advantage of? 

[Cpa Cat]

"It's embarrassing to say that you have to work overtime in order to make enough money to live on," she says.

...she works in sales part-time. To afford educational opportunities for her high-school-aged son, she also picks up odd jobs within the gig economy.

She seems to fail to understand her reality. Working part time isn't the same thing as working overtime. She sells eggs and honey at the farmer's market and works part time in sales.

Sahhar and her husband don't plan to retire. "I expect to work until I'm dead."

Does she mean work part time and do hobbies until she's dead?


This other guy made a legit, common financial mistake:

"Have two incomes, and one is essentially dedicated to daycare, or have one income and a stay-at-home parent." They chose the latter: His wife stayed home to take care of the kids. Looking back, Hugart says, he probably would have tried to keep that two-parent income.

It seems like a good idea at the time to have a parent at home, but it has long term consequences for the SAHP's earning potential. It's hard to undo. Not impossible, mind you, but hard. I feel that a lot of people in this situation don't even try to get back into the workforce. They say they can't possibly get a decent job after a 3-5 year break, but they aren't really looking. Yes, it might frustrate your ego to have to accept a lower paying salary and build back up, but it's doable.

I have an acquaintance in this situation who was offered a full-time job with benefits, but the facility wouldn't allow cell phones during work time. She refused the job because her 15 year old daughter wouldn't be able to call her to check in after school. She could call her dad, or a friend, but it was an excuse her mom used to justify not taking a full time job. To hear her tell it, it's "impossible" to find a job after being out of the job market.

[anadyne]

I would love to see their budgets. I can't believe $100K in Kansas doesn't keep you comfortable. And if eggs and honey puts her son through college (that's a heck of a lot of eggs and honey!) then more power to her, they should be proud of that, not ashamed.
 

[aceyou]

What living on 50k/year looks like for me:

- Own 300k very nice home.
- Wife and I own beautiful Prius's that are only 10 years old and only had 165k miles when we bought them.
- Eat tasty home-cooked meals made with fresh ingredients...lots of fruits/veggies, every day.
- Raising two kids.
- Multiple outfits of clothes that are good quality and serve us for every occasion we could need.
- Unlimited entertainment from books from library and bike rides and dinners with the neighbors.
- Multiple road trips with the kids to fun places to learn or spend time outdoors. 

There must be some important things I'm forgetting to buy, because we struggle to spend over 50k.

[sol]

And those breaks that go to rich people: like mortgage deductions?  Like state income tax deduction from federal taxes? Those benefits?  That he no doubt takes advantage of?

No, not like those. 

The biggest form of welfare in America, as measured in dollars, is welfare for the rich.  It's special benefits and payouts that only rich people can get.  It's the tax breaks for yachts and private planes.  It's direct federal subsidies to the companies they own.  It's the carried interest loophole, and agricultural subsidies to billionaire farm conglomerates, and the special tax exemptions for extractive industries like mining and oil drilling.  It's repealing the estate tax.  Sometimes it's the mortgage interest deduction on second and third homes.  It's tax free investing in off-shore accounts.  It's the social security earnings limit.  And most recently, it's the huge payoff received for using Citizen's United unlimited corporate funding to politicans to get get lowered personal income tax rates on the top income brackets.

Welfare for poor people goes to a lot more individual people than does welfare for the rich, but (perhaps necessarily) welfare for the rich costs the government a whole lot more.

You can certainly take issue with the rest of that article, but he's right on this one point.  The rich and powerful absolutely do get extra loopholes and exemptions in the tax code that exacerbate inequality.  It's designed that way on purpose.

[TempusFugit]

And those breaks that go to rich people: like mortgage deductions?  Like state income tax deduction from federal taxes? Those benefits?  That he no doubt takes advantage of?

No, not like those. 

The biggest form of welfare in America, as measured in dollars, is welfare for the rich.  It's special benefits and payouts that only rich people can get.  It's the tax breaks for yachts and private planes.  It's direct federal subsidies to the companies they own.  It's the carried interest loophole, and agricultural subsidies to billionaire farm conglomerates, and the special tax exemptions for extractive industries like mining and oil drilling.  It's repealing the estate tax.  Sometimes it's the mortgage interest deduction on second and third homes.  It's tax free investing in off-shore accounts.  It's the social security earnings limit.  And most recently, it's the huge payoff received for using Citizen's United unlimited corporate funding to politicans to get get lowered personal income tax rates on the top income brackets.

Welfare for poor people goes to a lot more individual people than does welfare for the rich, but (perhaps necessarily) welfare for the rich costs the government a whole lot more.

You can certainly take issue with the rest of that article, but he's right on this one point.  The rich and powerful absolutely do get extra loopholes and exemptions in the tax code that exacerbate inequality.  It's designed that way on purpose.

Im not knowledgable enough to either agree or disagree on that list, but it wasnt really the point i was attempting to make.  My point, perhaps poorly made, is that if you make 100k a year, you are rich.  Not yachtIng club, cigar smoking with cognac, scheming to stick it to the little guy whilst being driven to your weekend home rich, but rich enough that you have available to you certain tax advantages that less affluent people do not.  And most of us dont feel guilty about using them.

I dont disagree with you about your point, it simply isnt the same point i was trying to make.

[Freedomin5]

Doesn't it depend on whether this is $100K gross salary or net salary? And your federal/state tax rates?

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

$100K net would be a different story, and yes, you deserve to be mocked if you can't live well on $9K a month.

[Paul der Krake]

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

That's not how tax brackets work.

[Freedomin5]

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

That's not how tax brackets work.

Sorry...that is true. I oversimplified. It would put you at the highest tax bracket, though that may not be your effective tax rate? I think that's a bit more accurate? The point regarding net income versus gross income still stands, though.

[JLee]

And those breaks that go to rich people: like mortgage deductions?  Like state income tax deduction from federal taxes? Those benefits?  That he no doubt takes advantage of?

No, not like those. 

The biggest form of welfare in America, as measured in dollars, is welfare for the rich.  It's special benefits and payouts that only rich people can get.  It's the tax breaks for yachts and private planes.  It's direct federal subsidies to the companies they own.  It's the carried interest loophole, and agricultural subsidies to billionaire farm conglomerates, and the special tax exemptions for extractive industries like mining and oil drilling.  It's repealing the estate tax.  Sometimes it's the mortgage interest deduction on second and third homes.  It's tax free investing in off-shore accounts.  It's the social security earnings limit.  And most recently, it's the huge payoff received for using Citizen's United unlimited corporate funding to politicans to get get lowered personal income tax rates on the top income brackets.

Welfare for poor people goes to a lot more individual people than does welfare for the rich, but (perhaps necessarily) welfare for the rich costs the government a whole lot more.

You can certainly take issue with the rest of that article, but he's right on this one point.  The rich and powerful absolutely do get extra loopholes and exemptions in the tax code that exacerbate inequality.  It's designed that way on purpose.

Im not knowledgable enough to either agree or disagree on that list, but it wasnt really the point i was attempting to make.  My point, perhaps poorly made, is that if you make 100k a year, you are rich.  Not yachtIng club, cigar smoking with cognac, scheming to stick it to the little guy whilst being driven to your weekend home rich, but rich enough that you have available to you certain tax advantages that less affluent people do not. And most of us dont feel guilty about using them.

I dont disagree with you about your point, it simply isnt the same point i was trying to make.

Do tell! I'm around that income level and would love to find all these rumored tax tax advantages that apparently exist for us "rich" people.

So far, I don't qualify for earned income tax credit, American Opportunity Credit, Lifetime Learning Credit, deductions for tuition/fees, student loan interest deduction, saver's credit, or even a deductible Traditional IRA.

[JLee]

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

That's not how tax brackets work.

Sorry...that is true. I oversimplified. It would put you at the highest tax bracket, though that may not be your effective tax rate? I think that's a bit more accurate? The point regarding net income versus gross income still stands, though.

Your effective tax rate would be 27.38%, giving you a net income of $72,623.

[Kyle Schuant]

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

Per this site, which was the first result for "Toronto income tax", a gross income of $100k from employment would give you a post-tax income of $72.6k. Interestingly, self-employment income would give you $1k less, but income just from dividends would give you more - nice news for the FIRErs.


If you have time to type a response, you have time to do a cursory google search.

[Cranky]

It would be interesting to see actual budgets. I think some choices/mistakes can be hard to recover from, and student loans and medical debt can be hard to get on top of.

But we’re in that general income range, and it’s plenty. We’ve had good health insurance, though, and a couple of times, that’s been really important.

What we did right - we bought a small house in a less than affluent neighborhood, because that’s what we could afford, and we stayed in it when we *could* have afforded to trade up.
We didn’t have *any* credit cards until we were in our mid-30s, which meant that if we didn’t have cash, we did without. That was often stressful, but it kept us out of debt.

And I stayed home full time for 16 years, which I think was a great decision . It let my dh put in the time and energy he needed to professionally without either of us being frazzled, and when the kids were ready for college, I easily got a part time job that paid our share. At that point I had no childcare costs and we didn’t take out any loans. Once that was done, I dumped my entire salary (not really spectacular) into savings because we live be comfortably on dh’s salary.

[EarthSurfer]

I have been following this series, and I think many of us are quick to judge based on the title alone.

I genuinely have empathy for the last family in the series. The scant details only emerge in the audio version of the story.

This family is struggling due to having two adult children with severe non-verbal autism. Given the short format of a radio story, the details are sparse, and it is difficult to understand the challenges.

It is unlikely this family can receive any significant financial or social assistance at the $100,000/year income level in a low tax state such as Virginia. They are having to fund care for the son and daughter out of their own pocket. They have chosen not to 'dump' their "kids" into to a social welfare program. Hopefully, the bankruptcy process helped them identify resources in the community to support their son & daughter.

This gets tougher under one version of the Federal Tax Plan which removes the deduction for families with high medical expenses.

BUT... Yeah, the vast majority of these people are spending to look like they are wealthy rather than being wealthy.

[ducky19]

It seems like a good idea at the time to have a parent at home, but it has long term consequences for the SAHP's earning potential. It's hard to undo. Not impossible, mind you, but hard. I feel that a lot of people in this situation don't even try to get back into the workforce. They say they can't possibly get a decent job after a 3-5 year break, but they aren't really looking. Yes, it might frustrate your ego to have to accept a lower paying salary and build back up, but it's doable.

I have an acquaintance in this situation who was offered a full-time job with benefits, but the facility wouldn't allow cell phones during work time. She refused the job because her 15 year old daughter wouldn't be able to call her to check in after school. She could call her dad, or a friend, but it was an excuse her mom used to justify not taking a full time job. To hear her tell it, it's "impossible" to find a job after being out of the job market.

We ran into this with my wife - she was a teacher and decided she wanted to stay home with the kids. She got her certification for a home daycare and operated that for around 6 years, which is about 3 longer than she intended. Now she is trying to get back into teaching and has found it difficult to get a foot in the door. She accepted a teaching position in a district that turned out to be terrible (the administration, not the kids), so she took a 50% paycut to work in our kids' district as a teacher's aide. We really don't need for her to work, but she loves what she does and so is willing to do what she has to do to get back into a full time teaching position. She loves the district we're in and her attitude about work has done a complete 180. I know that she will eventually get back to a full time teaching position, but it does take time and sacrifice to do so.

[JayhawkRacer]

The second family is from Olathe, Kansas. I just moved away from there a year ago. It's so dang cheap to live in Olathe, but there are a lot of neighborhoods with the $350,000 price tag. Just don't live in one of those and don't shop at Whole Foods and you'll be fine.

[ducky19]

Listening to these interviews, I just want to reach through my headphones and slap the interviewer every time she makes that sympathetic "Hmm" sound... She does it every time they cry about something completely within their control. For instance, the young man in Seattle who is on the road for 150 + days out of the year, yet never considered getting a place with roommates since he's never there. No, let's just throw $1900 a month down the drain! GAHHHH!!!!

[Abe]

"With my husband and I now, we haven't been able to do Christmas in 10 years. We don't even have a tree," she says.

Example of underlying consumerist mentality that partially led to their troubles? Last time I checked, celebrating Christmas theoretically only involved going to Church, and maybe a nice dinner. You're an adult. You don't need expensive presents.

[dcheesi]

I moved to Gaithersburg MD recently, and it certainly is expensive to live here; not "$100K == poor" expensive, mind you, but definitely HCoL. What I wonder is whether the first couple properly considered CoL differences before deciding to move; it sounds like they moved for a higher salary, but even a hefty increase can wind up being an effective pay-cut if you're moving here from a LCoL area.

Meanwhile, I would love to see some numbers for that family in Kansas. Champagne and caviar for dinner every night, or what?!

[RidetheRain]

"I was really surprised because from the outside, it looks like we have plenty of money"

I remember a kid when I was growing up that never wore the same shirt twice. I was always jealous that she had the new clothes and the new books and the new "it" thing of the year. Then I visited her home and found that she lived in an apartment too small for her family and had a closet as a bedroom. Shopping bags full of new clothes were just everywhere.

I was told that this was sad and that I should feel bad for the family's poor circumstances and to be thankful for the wonderful life my parents provided for me.

Reading this article reminds me of how frustrated I was looking at her closet with all the fancy decorations and bursting with stuff. I was internally screaming "I don't have all this stuff! If things are so bad then why do you have all this stuff!"

[Just Joe]

There just wasn't enough detail in the article to do anything but take it at face value and make certain assumptions about the family. Nobody ought to be living in those places and running out of money using MMM frugality tactics.

[TheGrimSqueaker]

"I was really surprised because from the outside, it looks like we have plenty of money"

I remember a kid when I was growing up that never wore the same shirt twice. I was always jealous that she had the new clothes and the new books and the new "it" thing of the year. Then I visited her home and found that she lived in an apartment too small for her family and had a closet as a bedroom. Shopping bags full of new clothes were just everywhere.

I was told that this was sad and that I should feel bad for the family's poor circumstances and to be thankful for the wonderful life my parents provided for me.

Reading this article reminds me of how frustrated I was looking at her closet with all the fancy decorations and bursting with stuff. I was internally screaming "I don't have all this stuff! If things are so bad then why do you have all this stuff!"

Priorities.

The really sick part is when people are crying poor AND spending hand over fist on name brand clothing (hoarded and bursting out of the closets), along with constant restaurant meals, big screen televisions, tobacco or casino habits, and constant outside-the-home entertainment. When they see someone with, say, a clean home that has some nice things in it they decide you're "rich" and can subsidize them so that they can afford more tobacco consumption or restaurant meals.

Edited to add: deciding someone is "rich" or has lots of money to spare just because their spending priorities are for things that last a long time instead of things that instantly lose their value, or focusing on what someone else has while ignoring what they don't have, is a sign of sloppy thinking.

[ACyclist]

100K for us looks like:

A modest 1000 sq ft home in a good neighborhood,  and it is mostly paid off
No CC debt
Ability to save for retirement
Owning a rental property (paid off)
Ability to plan for emergencies.
Somewhat nice toys in the garage, and plenty of time to play with them.
Food on the table and all bills easily paid.
Ability to buy pomegranates and nice cheese without feeling too guilty.  :)

What it doesn't afford:

expensive vacations every year (if we did this, we could not max retirement options.
fancy new clothes
a high end car
a home bigger/fancier than the one we have

What I take away from this is that 100K provides a comfortable life, while retaining the ability to save enough for retirement.  I could afford a nicer car, but we might not max out Roth or be paying enough towards retirement (which is drastically behind for us, if we want to go before we are 65).

[honeybbq]

I would love to see their budgets. I can't believe $100K in Kansas doesn't keep you comfortable. And if eggs and honey puts her son through college (that's a heck of a lot of eggs and honey!) then more power to her, they should be proud of that, not ashamed.

Seriously. 100k ain't much in Seattle, but it's a fortune in the midwest.

[russianswinga]

I'm right below that $100K threshhold, but stay-at-home wife now has a side hustle, so this year we might break the 6 figure line.
What it looks like to us:

- 1200 sq ft townhouse condo in San Diego - currently worth about $350K, we still owe 220K on it. That's SoCal real estate for you - the Sunshine tax. Perfectly adequate for our 3-person family, and though I would like a home office to work remotely out of, that's not really in the plans right now.
- A rental property in Sacramento, CA. $92K 1000 sq ft townhouse that rents out for $1K, pretty much covering its own 15 yr mortgage, tax, HOA, and still leaving us with $100-200 every month that we put into its maintenance fund
- 401k and Roth IRA funded to where I feel comfortable
- 6 months emergency cash reserves
- No CC Debt
- Ability to save for retirement. Savings rate is way less than we COULD do, but enough to have us retire to our preferred destination outside the united states at age 52 (currenly both 34) or when daughter gets comfortable in College.
- 529 for our 2 year old daughter which will fully pay for her bachelor's degree
- Good healthy food on the table, mostly home cooked
- 1 restaurant meal a month (usually local Sushi, I'm not about to risk doing raw fish at home)
- Good new clothes purchased at a significant discount (Burlington Coat Factory and such). Not boutique (Burberry Prada) but not Wal-mart (Lee). More mid-brands like Calvin Klein or Buffalo David Buitton. Example - new Buffalo jeans are $130, I buy them closeout at Burlington for $30.
- Appliances for the house all purchased discounted (used like new, or showroom floor models)
- Good discounted new or used toys, purchased in moderation, but mostly gifted by grandparents that spoil their one and only granddaughter
- Two used cars - a 2011 Mazda3 frugal family sedan and a 2008 BWM 335i Convertible. Both purchased for a fraction of their cost new, but especially the BMW - the $65000 sticker on a German topless luxo-barge becomes $13,000 once you wait a few years :) Plus I perform all of my own maintenance - I love wrenching under the hood on a weekend.

- 2 getaway family vacations per year - this is largely due to travel hacking. I haven't paid for a Southwest flight in over 2 years. Caribbean cruise last year at a discount, with free airfare for family from California on credit card points. San Francisco vacation for our anniversary next February with free airfare and free hotel with points. Amsterdam and northern Belgium road trip next year with free business-class transatlantic airfare and cheap local AirBNB accommodations on the outskirts of large cities.

[Goldielocks]

"It's embarrassing to say that you have to work overtime in order to make enough money to live on," she says.

...she works in sales part-time. To afford educational opportunities for her high-school-aged son, she also picks up odd jobs within the gig economy.

She seems to fail to understand her reality. Working part time isn't the same thing as working overtime. She sells eggs and honey at the farmer's market and works part time in sales.

Sahhar and her husband don't plan to retire. "I expect to work until I'm dead."

Does she mean work part time and do hobbies until she's dead?


This other guy made a legit, common financial mistake:

"Have two incomes, and one is essentially dedicated to daycare, or have one income and a stay-at-home parent." They chose the latter: His wife stayed home to take care of the kids. Looking back, Hugart says, he probably would have tried to keep that two-parent income.

It seems like a good idea at the time to have a parent at home, but it has long term consequences for the SAHP's earning potential. It's hard to undo. Not impossible, mind you, but hard. I feel that a lot of people in this situation don't even try to get back into the workforce. They say they can't possibly get a decent job after a 3-5 year break, but they aren't really looking. Yes, it might frustrate your ego to have to accept a lower paying salary and build back up, but it's doable.

I have an acquaintance in this situation who was offered a full-time job with benefits, but the facility wouldn't allow cell phones during work time. She refused the job because her 15 year old daughter wouldn't be able to call her to check in after school. She could call her dad, or a friend, but it was an excuse her mom used to justify not taking a full time job. To hear her tell it, it's "impossible" to find a job after being out of the job market.

OOOH, CPA cat,  I love your analysis.

I know someone who kept refusing job offers, too because:
1) Would involve a commute longer than 20 minutes and / or a bridge (she lived in the suburbs. fair statement except she was looking for $20/hr+ work)
2) Did not offer FT benefits, or benefits were not great in future.  Kept passing on the great pay part time offers to hold out for the "dream job", at which she picked up 3 shifts per month as casual call up now.
3) Would not work with her getting home to drive her kids to their extra cirricular class they had 4x per week.

Seemed to me that a FT job with good pay and benefits immediately conflicts with being at home by 4pm each day, but what do I know?

[Goldielocks]

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

That's not how tax brackets work.

Sorry...that is true. I oversimplified. It would put you at the highest tax bracket, though that may not be your effective tax rate? I think that's a bit more accurate? The point regarding net income versus gross income still stands, though.

FYI 
ONTARIO 2017
$100k single wage income, without other deductions for dependents, RRSP, etc nets $75,026/yr .
$100k dual family wage income (split $75k/ $25k) with 2 dependents over 6 years but no RRSP  nets approx $87k/yr.. after CCB is included, anyway.
 
Ontario -- has a significant grant money for college students from middle income earners, of which $100k would just qualify for.   

[katethekitcat]

What really killed me was the guy who had a $100K salary and was apparently being crushed by his $30K student debt. I have just over a $100K salary and graduated with $72K in debt. 16 months later, and I'm making my final loan payment this Wednesday - would be making it earlier if I had wised up/read MMM earlier in life.

[MrsPete]

Wah wah wah

Yep, that's all I heard.  I'm earning less than that, and I'm paying for my youngest child's college education and saving almost 25% of my gross pay. 

It seems like a good idea at the time to have a parent at home, but it has long term consequences for the SAHP's earning potential. It's hard to undo. Not impossible, mind you, but hard.

I think -- in part -- it's because an entry level job in your 20s feels acceptable ... whereas, that same entry level job in your 30s (or beyond) feels inadequate.  After all, your other friends have had a couple promotions.  And it seems "unfair" to have to go back to that entry level job once you've already done that stage once.

[MayDay]

People whose upper-class salaries are not keeping pace with their upper-class standards of living, Tankersley says, are often experiencing a lingering effect of the 2008 financial crisis.

That is the bottom line.  100K might give you an upper class life (insert 47 page long debate about what is upper class) in some areas, but not all.

We were at ~100K until I went back to work (now about twice that).  For us it looked like:

Modest 3/2 house in MCOL, but in a good area.
2 kids no problem but 3 felt too expensive if we wanted to help with college
Able to afford all medical care and food, etc no problem (including years we hit the OOP max at 10K)
Drove old cars
Bought expensive food if we wanted but not many restaurants
Occasional expensive vacations but not every year
Maxed out retirement (~28K a year) plus some extra savings beyond that to save for house down payment

So certainly doing WELL (and I considered us "rich") but if we wanted to save, we used a lot of the discretionary income on that.  If we had put the standard 10% in retirement, and spent the rest we could have had anything we wanted (new car, fancy vacation annually, country club membership etc) but not all the things.  The biggest thing we told the kids was that no they didn't have the nicest/fanciest everything, but they NEVER had to worry about food, shelter, transportation, or medical care, which I think people at 50K income do worry about.

Now we make ~200K and it is kind of ridiculous TBH. 

[MayDay]

I will also add that you aren't hearing the whole story (obviously!) in these interviews. 

My young coworkers, new engineers making in the 60-70K range (which is dang good for 22-24 years old!) buy new trucks every 3 years.  They are not cheap trucks, but I don't know what they cost.  But they trade them in for ~20K after 3 years, so I assume they must cost 40K to start.  And they spend a lot on toys.  And they are also working hard to pay down student loans faster, so they feel very pinched.  BUT HELLO THE TRUCK AND TOYS.  They are trying to live the middle to upper class life they grew up with or feel like they should be able to afford on a good salary, but when you start the month with a 600$ truck payment and a 600$ SL payment, yah, things feel tight. 

[Abe]

I find $200k to be a giant firehouse of money, even in Los Angeles. Somewhere in between $100k and $200k must be enough for two adults to avoid bankruptcy in the Midwest.

[Money Badger]

There are winners and losers in the game of life.    Anyone who would whine to a reporter (or allow their comments to be taken out of context for such an article) is losing.   It's not what you earn, it's what you give, then keep.

[boarder42]

This just magnifies the lack of financial literacy in this country. 

I'm an engineer and currently we're spending piles of money at my company on STEM education which is great.  But the next big thing will be personal finance that needs to be taught and given more visibility as to its issues.  the problem with this is the banks and financial firms arent going to fund this - keeping people in the dark helps them profit.  Its all oging to have to be ground roots and people who just care.

[iris lily]

$100,000 in flyover country allows saving at a high rate, nice house, vacations to Europe, and early retirement where more European vacations can be taken in this strong stock market. That is us.
Our income fluctuated, but we had at least 15 years of $100,000 income so that is strong in the midwest.

[tooqk4u22]

$100K gross in Toronto would put you the 51% tax bracket, which means you would take home $49K per year. Still not bad but it certainly doesn't afford you an upper-middle class lifestyle.

That's not how tax brackets work.

Sorry...that is true. I oversimplified. It would put you at the highest tax bracket, though that may not be your effective tax rate? I think that's a bit more accurate? The point regarding net income versus gross income still stands, though.

Your effective tax rate would be 27.38%, giving you a net income of $72,623.

In the US a 100k income would have federal and 8% for SSI/medi of:

Single - $18K + $8k = $26k....18% Fed/26% total 
Married 0 kids - $9k + $8k = $17k....9% Fed/17% total
Married 2 kids - $6k + $8k = $14k....6% Fed/14% total

Above based on standard deduction, which applies to 90% of the population, and ignores state taxes bc that varies so much state to state.  Of course this can be lowered a lot by maxing retirement accounts but if I had $100k income and was married it doesn't makes sense to put money into tax deferred accounts with 9% and 6% effective rates. 

In some regard this is the also the answer to health care....if Canada would be 27% that allows for another $9-13k that could be taxed for health care....but this is never on the table because we want the rich to pay for it while still having our lower taxes.  Don't get me wrong, I hope it stays this way. 

[iris lily]

"With my husband and I now, we haven't been able to do Christmas in 10 years. We don't even have a tree," she says.

Example of underlying consumerist mentality that partially led to their troubles? Last time I checked, celebrating Christmas theoretically only involved going to Church, and maybe a nice dinner. You're an adult. You don't need expensive presents.

this is the same mentality as people who cant see their way clear to get married because they cant addord it.

Ridiculous! No one needs a BiG White Wedding, only consuma suckas think that way.

[BTDretire]

Do tell! I'm around that income level and would love to find all these rumored tax tax advantages that apparently exist for us "rich" people.

So far, I don't qualify for earned income tax credit, American Opportunity Credit, Lifetime Learning Credit, deductions for tuition/fees, student loan interest deduction, saver's credit, or even a deductible Traditional IRA.

 Mommy, their calling me rich, tell them to stop!
 Hmm, I'm in that income area also, and I'm taking full advantage of all the tax advantages.
And I may have several advantages being self employed, those would be SEP/IRA, deductible health insurance and deducting half my SS tax. (but I pay both halves)
75k income, 22k Ordinary dividends, 7.5k Qualified dividends and 11k interest.
 Total income $115.5K, no tax on the qualified dividends, $108k. $3000 capital loss, $105k.
Health savings account deduction,  $97.4k. Deductible part of SS, $92k. Two SEP's $78k.
Self employed health Insurance $68k. Standard deduction 12k $56k,
4 personal exemptions, $40k.
So now I'm down to $40k taxable income, the tax is about $3,900, but, I also get education credits off my tax bill of $3k, so the total tax paid $900.00.
 That was an exceptional year, I'll lose one personal excemption and education credit, but not
the costs next year. The new tax bill will probably increase my taxes, but you can see I can't really complain, but I will.

 I just notice my Ordinary dividends, qualified dividends and interest are producing $40.5k.
Looks like I made it... I'm mostly retired, my wife still wants to work.

[JLee]

Do tell! I'm around that income level and would love to find all these rumored tax tax advantages that apparently exist for us "rich" people.

So far, I don't qualify for earned income tax credit, American Opportunity Credit, Lifetime Learning Credit, deductions for tuition/fees, student loan interest deduction, saver's credit, or even a deductible Traditional IRA.

 Mommy, their calling me rich, tell them to stop!
 Hmm, I'm in that income area also, and I'm taking full advantage of all the tax advantages.
And I may have several advantages being self employed, those would be SEP/IRA, deductible health insurance and deducting half my SS tax. (but I pay both halves)
75k income, 22k Ordinary dividends, 7.5k Qualified dividends and 11k interest.
 Total income $115.5K, no tax on the qualified dividends, $108k. $3000 capital loss, $105k.
Health savings account deduction,  $97.4k. Deductible part of SS, $92k. Two SEP's $78k.
Self employed health Insurance $68k. Standard deduction 12k $56k,
4 personal exemptions, $40k.
So now I'm down to $40k taxable income, the tax is about $3,900, but, I also get education credits off my tax bill of $3k, so the total tax paid $900.00.
 That was an exceptional year, I'll lose one personal excemption and education credit, but not
the costs next year. The new tax bill will probably increase my taxes, but you can see I can't really complain, but I will.

 I just notice my Ordinary dividends, qualified dividends and interest are producing $40.5k.
Looks like I made it... I'm mostly retired, my wife still wants to work.

I don't give a fuck what people call me - I just want to know where all these mysterious tax breaks are. As my income increases, tax breaks appear to be disappearing.

Single, no kids, W-2 employee - go!

[ixtap]

I would love for NPR to do a follow up of people thriving on $50k in those same places.

[TempusFugit]

I would love for NPR to do a follow up of people thriving on $50k in those same places.

That would be an interesting contrast.   optimists vs pessimists. 

[Cassie]

I stayed home for a number of years with my kids and used that time to earn a few college degrees. However, trying to find a professional job in my 30's was challenging but I took whatever I could get with low pay and no benefits. What that got me was experience and eventually I ended up with a good job and career. 

[RidetheRain]

I stayed home for a number of years with my kids and used that time to earn a few college degrees. However, trying to find a professional job in my 30's was challenging but I took whatever I could get with low pay and no benefits. What that got me was experience and eventually I ended up with a good job and career.

Don't go ruining the article with your logic and good sense.

[MayDay]

What I take away from this is that 100K provides a comfortable life, while retaining the ability to save enough for retirement.  I could afford a nicer car, but we might not max out Roth or be paying enough towards retirement (which is drastically behind for us, if we want to go before we are 65).

Where I see the difference is that you're saving, while each of the interviews indicates that they aren't.

But they probably aren't because they took this "We Made It" list:

Private school
Retirement savings
New car every 2-3 years
Nice vacation 1-2 times a year
Eat out and buy clothes and stuff all the time with no mind to budgetting
A McMansion
Country Club membership
Etc

And chose everything except retirement savings.  They still have lots of stuff that A 25-50K family doesn't (like food, all the healthcare they want, roof overhead, functioning vehicle), they just can't have EVERYTHING from the "We Made It" list.

[SwordGuy]

I don't give a fuck what people call me - I just want to know where all these mysterious tax breaks are. As my income increases, tax breaks appear to be disappearing.

Single, no kids, W-2 employee - go!

Three words:

Unrealized capital gains.

[Imustacheyouaquestion]

$100k is an interesting choice for an income level to profile. 87th percentile of national household income, high enough to be upper middle class in LCOL areas, still plausibly low enough for a single person in a HCOL to feel like they're barely getting by. Almost all Americans, no matter their income, manage to spend most of their income with very little savings or safety net. I wonder what the threshold is where people *stop* living paycheck to paycheck, on average. $1M/year?

[Cpa Cat]

Single, no kids, W-2 employee - go!

I had a whole post explaining how a Single person with no kids and W-2 employee could destroy their tax returns - current and future - with the weapon that is the tax code, but then I realized that people pay me for tax advice, so I'd rather not just give it away for free on a forum.

In all seriousness though, I have no children and I pay a ridiculously low federal tax rate via preferred rates on cap gains, dividends, retirement savings (traditional contributions and backdoor/mega-backdoor ROTH). I don't even use all of the possible space to defer taxes into backdoor ROTH space because my effective federal tax rate is already around 7% on $250,000 of income. The #1 concern on my personal tax return is how to avoid paying the 20% cap gain rate on taxable investments.

The truth is that high income individuals with a lot of kids don't end up getting any more benefits than you. AMT eliminates the extra exemptions and they don't get the child tax credit. Kids are a tax break for the middle class, but not upper class. But single/no-kids middle-class people have more disposable income for retirement savings.

States generally have less abusive tax codes than the federal government. So state taxes are what they are. We reduce state taxes by trying to ensure that federal AGI is as low as possible, and sometimes we have to deal with add-backs. I pay as much in state taxes as I do in federal taxes.

Sword Guy is right that unrealized capital gains can be a source of tax savings - 1) If I die with them, my heirs get a stepped up basis - but I don't care about tax savings when I'm dead, I care about it now. 2) Donating highly appreciated stock to charities triggers maniacal laughter from me. Otherwise, forcing taxpayers to actually mark to market (both gains and losses) on an annual basis seems like an unreasonable burden, without a lot of benefit.