By Wes Moss
Not long ago in an economy not so far away, a six-figure salary spelled arrival, success and wealth, not to mention future financial freedom and security. Times and prices change.
How quaint that $100,000 a year once seemed like millionaire status for wage-earners. When I was a kid, my parents said things like, “He can certainly afford it, he makes six figures!”
Earning a $100,000 salary remains special and rewarding. In researching my new book, I find the happiest retirees had annual income peaking at more than $100,000 while they still worked. (The least happy group’s pre-retirement wages averaged about $73,000.) Other research shows higher income correlates with increased happiness, to a point.
But $100,000 ain’t easy street any more. Inflation ravages this once-status salary. In 2010, $100,000 bought what $109,291 buys today; in 2000, what $138,384 buys today; in 1990, $182,338; in 1980, $289,218.
The 1970s runaway inflation did the worst recent damage: To match the purchasing power of $100,000 in 1970 takes more than $600,000 today.
Prices for essentials like housing and medical care increase at many times the rate of inflation.
Driving? Hitting the books? Gasoline prices almost tripled between 1969 and 1980 and tripled again between 1998 and 2008.
Overall costs of even community colleges outpace inflation by 24 percent over the past five years, according to the College Board.
Taxes? Count on losing about 30 percent of your gross to federal, state and local taxes. If you earn $100,000 yearly, after taxes you bring through the front door about $5,800 per month or $69,600 annually.
That amount provides a cushy lifestyle for a single, childless apartment dweller. It’s no abundance of money for a married parent, especially in an urban area. A mortgage, a couple of car payments, an orthodontist bill and an annual vacation today guts even a six-figure income.