The financial picture for single adults residing in large U.S. metropolitan areas is a daunting one. According to a new analysis by SmartAsset, you may be surprised to learn that… Of the 100 largest U.S. cities, just nine have enough median income to support a middle-class life for single adults. This disparity underscores the increasing income inequality between the largest urban agglomerations and their less populous peers.
Back in 1980, employees in what are now the densest U.S. commuting zones made 32% higher salaries than their counterparts in the nation’s sparsest locales. By 2015, that gap had increased to 71%, according to the Federal Reserve. Beyond the immediate changes, this trend highlights just how much bigger cities have pulled away from smaller cities with wage growth over the last few decades.
SmartAsset's study utilized the Massachusetts Institute of Technology Living Wage Calculator and the 50/30/20 budgeting guideline to determine what constitutes being "financially comfortable." The advisory recommends that people budget at least 50% of their income towards essentials. Additionally, it calls for setting aside 30% for discretionary spending and 20% for savings and investments.
According to SmartAsset, a single adult requires a minimum salary of $85,197 per year. This level allows for a family of four to live comfortably in any of the 100 largest U.S. metropolitan areas. In metro areas such as New York, this threshold increases dramatically, requiring an annual salary of $136,656. As a point of reference, New York City’s median income is $76,577. This figure underscores the daunting gap between current earnings and what residents need to make a decent living.
San Francisco has its own challenges. A household consisting of one adult wouldn’t be able to afford a comfortable lifestyle unless that person makes over $120,000 per year. Potential jobs for this path in metropolitan areas typically come with six-figure salaries. Even these figures might not be enough given the high cost of living.
"Typically, my high-cost area and high-salary clients have a lot more savings and disposable income, even though it's expensive to live in the city in question," stated Jen Swindler, a certified financial planner based in Salt Lake City, Utah.
In metropolitan areas such as Indianapolis, the local area median household income of $66,629, according to U.S. Census Bureau American Community Survey. This number shines a light on a deep disparity between wage and the cost of living comfortably. The survey provides key information on median household incomes in the over 300 sampled U.S. cities. This data serves as an important starting point for dialogues around income inequality and cost of living debates.
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