Is $87,000 a Good Salary? Factors to Consider

Determining if an $87,000 salary is “good” involves a nuanced assessment, as its value depends on individual circumstances and market conditions. Purchasing power and financial well-being vary significantly. What is comfortable for one may be barely adequate for another. This article explores the various factors that shape the perception and reality of an $87,000 salary.

Market Context and Industry Standards

An $87,000 salary is above the national average in the United States ($62,027 in 2024). The 2024 U.S. median household income was $80,020, indicating that an $87,000 salary places an individual above the median for households. However, this figure’s competitiveness is heavily influenced by the specific industry and job role. High-paying sectors like technology and finance have average salaries well above this amount, with tech over $130,000 and finance over $139,000. In such fields, $87,000 might be entry-level or mid-career, potentially below average.

In retail or hospitality, $87,000 would be much higher than typical earnings. Average annual earnings in leisure and hospitality are around $30,167, while private education and health services average $60,000. Thus, $87,000 can be a strong income in industries with lower compensation, offering a higher standard of living relative to peers in those fields. Experience, skills, and education also influence where $87,000 falls within an industry’s compensation range.

Geographic Cost of Living

The purchasing power of an $87,000 salary is greatly impacted by the geographic location where one resides. What is substantial in a low-cost area may be insufficient in a high-cost urban center. The Cost of Living Index (COLI) quantifies these differences, with a national average set at 100%. For example, Kansas has a COLI of 86.5%, while California is 142.2%, indicating higher expenses.

Housing costs are often the largest variable expense, with average home prices varying widely across the country. In high-cost areas like New York City, a one-bedroom apartment averages over $4,100 monthly, with total living expenses for a single person over $5,000. In contrast, the same salary affords a much higher quality of life in regions with lower housing and expenses, where a median home might be closer to $250,000. Transportation, groceries, and consumer goods also contribute, making the salary feel different depending on the local economy.

Personal Financial Circumstances

An individual’s financial situation and goals are key to evaluating an $87,000 salary. Personal debt obligations, such as student loans, can greatly reduce discretionary income. For instance, average student loan payments range from $336 for bachelor’s degree holders to $842 monthly for those with master’s degrees, impacting available funds. High debt affects credit scores and delays milestones like homeownership or retirement savings.

Dependents, such as a spouse or children, alter the financial landscape, as household expenses increase. Lifestyle preferences, including leisure activities, dining out, or travel, influence how far an $87,000 salary stretches.

Beyond gross income, salary value is shaped by federal income taxes and employee benefits. For a single filer, $87,000 taxable income falls into the 22% or 24% federal tax bracket for 2024, meaning portions of the income are taxed at these rates, not the entire amount. Employer-provided benefits, which include health insurance, retirement plan contributions (like 401(k) matches), and paid time off, add value to overall compensation, ranging from $15,000 to $25,000 annually. These benefits increase total compensation and contribute to financial security and wealth accumulation.