Is $100k a Good Salary in Boston?

Is a $100,000 salary sufficient for comfortable living in Boston? Whether such an income is “good” depends on personal financial decisions and the city’s unique economic landscape. This article explores the financial considerations of earning $100,000 in Boston.

Understanding Boston’s Major Expenses

Living in Boston involves some of the highest costs for essential expenses in the United States. Housing represents the most significant financial outlay for most residents. Rental prices vary by apartment size and neighborhood, with studios and one-bedroom units typically ranging from $2,400 to $3,500 per month. Larger two-bedroom apartments can exceed $4,000 monthly, especially in popular areas. Homeownership presents an even greater financial commitment, with average home values significantly exceeding national figures.

Transportation costs also contribute substantially to living expenses. While the Massachusetts Bay Transportation Authority (MBTA) offers a comprehensive public transit system, its fares are a notable monthly expenditure. Car ownership introduces additional costs, including fuel and parking fees that can range from hundreds of dollars per month. Many residents rely on public transit or car-sharing services to manage these expenses.

Daily living expenses, such as food and utilities, further impact a Boston resident’s budget. A single person might spend $300-$400 per month on groceries. Dining out can range from $20 to $35 per person for a mid-range meal. Utilities, including electricity, gas, internet, and water, typically fall within a range of $200 to $400 monthly for an apartment. Healthcare costs in Boston are notably higher, approximately 25% above the national average.

Calculating Net Income

A gross salary of $100,000 is subject to several mandatory deductions, significantly reducing take-home pay. Federal income tax is a primary deduction, calculated under a progressive tax system. For a single filer in 2024, a $100,000 gross income results in an estimated federal tax liability of approximately $17,053.

Massachusetts levies a flat income tax rate of 5% for 2024, meaning a $100,000 salary incurs approximately $4,600 in state income tax. Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare, are also withheld. The Social Security tax rate is 6.2% and the Medicare tax rate is 1.45%, totaling $7,650 for a $100,000 salary.

Beyond mandatory federal and state taxes, other deductions may further reduce spendable income. These include pre-tax contributions to retirement accounts like a 401(k) or health savings accounts (HSAs), and health insurance premiums. After accounting for federal income tax, Massachusetts state income tax, and FICA taxes, a $100,000 gross salary typically translates to an annual net income of approximately $70,697, or about $5,891 per month.

Crafting a Budget

Effectively managing a $5,891 monthly net income in Boston requires careful budgeting due to the city’s high cost of living. A common framework, like the 50/30/20 rule, suggests allocating income to needs, wants, and savings. However, Boston’s elevated expenses often necessitate a larger portion of income for essential needs. Prioritizing core necessities like housing, food, and transportation becomes paramount.

Housing will likely consume a substantial portion of the budget, potentially exceeding 30% or even 40% of net income for a single person. This means other spending categories must be adjusted to maintain financial equilibrium. After covering fixed costs, remaining funds are available for discretionary spending, which includes dining out, entertainment, and personal care. High fixed costs in Boston can limit funds for “wants,” making mindful spending important.

Setting aside funds for emergencies and future goals remains a sound financial practice. A modest emergency fund provides a buffer against unexpected expenses. Contributions to retirement accounts are valuable for long-term financial security. Balancing immediate needs with future aspirations requires discipline and regular financial review.

Salary Context within Boston

Understanding how a $100,000 salary positions an individual within Boston’s broader economic landscape provides valuable perspective. The median household income in Boston was approximately $94,755 in 2023, indicating that a $100,000 salary is slightly above the median for all households. This suggests many households operate at or below this level. Average individual salaries in Boston generally range from around $81,050 to $106,906.

Boston’s cost of living index consistently ranks significantly higher than the national average, often cited as 46% to 50% more expensive. This elevated cost impacts every aspect of daily life, from housing to groceries and transportation. Consequently, a salary considered substantial elsewhere may offer a more constrained lifestyle in Boston. Some analyses suggest that to “live comfortably” in Boston, a single adult might need an annual income closer to $124,966.

While a $100,000 salary in Boston provides a solid foundation, it necessitates careful financial planning and an understanding of the city’s unique economic environment. The high cost of living means that discretionary spending and savings may require more stringent management compared to less expensive urban centers. This context underscores the importance of a detailed budget and a realistic outlook on living expenses in the city.