A good friend and client of ours here at Peterson Wealth Services recently sent me an article about how difficult it has become to make a living on a six-figure salary, especially for those entering the workforce. The article got me thinking back to when I was 12 or 13. I had a goal to make $100,000 one day. If I could just make six figures, I believed I would have a sense of financial freedom.
As I have progressed in the finance business, I have noticed that a six-figure salary is not what it used to be. However, I do believe a good living can still be made—as long as the proper steps are taken. I would like to break this down further, if you will read along with me.
What Changed?
To fully understand why a six-figure income does not stretch as far as it once did, we need to look at what has changed over time. It is no secret that inflation has played a major role in how difficult it is to make ends meet.
A salary of $100,000 looks like this when we break it down: after federal and state taxes, Social Security, and Medicare, take-home pay usually lands in the $65,000–$70,000 range. That is about $5,500 per month to cover everything.
The average mortgage payment today for new buyers is about $2,329 per month. After adding in property taxes, insurance, utilities, groceries, and other expenses, there is not much room left to save. The mortgage alone accounts for over 42% of take-home pay.
If we use this same example but base it on averages from 2010, the problem becomes clear. Instead of $100,000, let’s use $60,000. Take-home pay would be close to $3,750 per month, and the average mortgage payment was around $927—just shy of 25% of take-home pay.
The housing market has increased in value dramatically. When inflation became a major issue in 2021 and 2022, interest rates shot up, but the housing market did not falter. This environment has created one of the most difficult times in our country’s history for young adults entering the workforce to buy a home. That is my opinion, but I believe the data supports it. One comparison I often discuss is the high-interest rate environment of the 1980s. Inflation-adjusted data shows that the average home today is about 60% more expensive than it was in 1980. The average home price in 1980 ($64,600) equates to roughly $254,000 when adjusted for inflation. The average home price today is about $410,000. So, if $100,000 does not go quite as far anymore, how can you still get ahead in today’s environment?
Tips and Tricks
As shown above, it is hard enough just to cover expenses while also saving for the future. So, what can be done to get ahead?
The first thing I would say…



