Is $87,000 a Year a Good Salary?

Whether an $87,000 annual income is “good” is highly subjective and deeply personal. What constitutes a comfortable or sufficient income varies significantly based on individual circumstances and priorities. Understanding the true worth of $87,000 requires a closer look at several influencing factors.

Factors Influencing Spendable Income

An $87,000 gross salary is subject to various deductions before it becomes spendable income. Federal income tax operates on a progressive system, taxing different income portions at increasing rates. For a single filer, this means not all income is taxed at the highest marginal rate. State and local income taxes also reduce take-home pay, with rates varying significantly across jurisdictions.

Mandatory payroll taxes, specifically Social Security (6.2% on earnings up to $168,600) and Medicare (1.45% on all wages), are also deducted. These contributions fund social insurance programs. Beyond mandatory taxes, pre-tax deductions further reduce taxable income and net pay. Common examples include health insurance premiums and contributions to retirement accounts like a 401(k).

Pre-tax contributions to retirement accounts like a 401(k) and healthcare accounts such as Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) reduce taxable income. Non-cash benefits provided by an employer, including health insurance contributions, paid time off, and 401(k) matching, add substantial value. These benefits significantly enhance an individual’s financial well-being beyond the direct salary.

Impact of Location and Cost of Living

The purchasing power of an $87,000 salary is profoundly influenced by geographical location and its associated cost of living. The same income can afford a vastly different lifestyle depending on whether one resides in a high-cost urban center or a lower-cost rural area. Housing costs represent one of the most substantial variations, with rent or mortgage payments differing significantly across regions.

Transportation costs also fluctuate based on location, encompassing fuel, vehicle maintenance, insurance, and public transit availability. In areas with extensive public transportation, car ownership might be unnecessary, reducing expenses. Conversely, car-dependent regions necessitate higher commuting outlays. The cost of essential goods and services, such as groceries and utilities, also varies by region.

For instance, the average monthly cost of groceries in the U.S. is around $418 per person, and utility bills also show considerable regional differences. These disparities mean an $87,000 salary could provide a comfortable living in some areas while barely covering basic expenses in others, directly impacting disposable income and overall quality of life.

Personal Financial Circumstances and Goals

An $87,000 salary’s adequacy is heavily shaped by an individual’s unique financial circumstances and personal goals. Household composition significantly alters financial demands. A single individual typically has different budgetary needs than someone supporting a spouse, children, or other dependents, as income must stretch further to cover additional living expenses and care costs.

Existing debt obligations also play a substantial role in determining spendable income. Payments for student loans, credit card balances, and auto loans directly reduce money available for discretionary spending or saving. High debt burdens can make an $87,000 salary feel less substantial. Conversely, an individual with minimal or no debt will find their income provides greater financial flexibility.

Personal spending habits and lifestyle choices further dictate how an $87,000 income is perceived. A lifestyle including frequent dining out, expensive hobbies, or regular travel consumes a larger portion of income than a more frugal approach. These choices directly affect the perceived “goodness” of the salary. An individual’s financial goals, such as saving for a home, retirement, or education, also influence how sufficient their income feels. These varied personal factors mean the same $87,000 salary can lead to vastly different financial realities and levels of satisfaction.

Benchmarking Against Income Averages

Comparing an $87,000 annual income to broader statistical averages provides valuable context. In 2024, the median individual income in the United States was approximately $50,200, while the average was around $73,471. This positions an $87,000 salary above both the median and average for individual earners nationally. For households, the median income was $80,020 in 2024, and the average was $114,395. An $87,000 salary for an individual would place them above the median for a household, suggesting a relatively strong financial standing compared to the broader population.

State-Level Averages

State-level income averages vary considerably, reinforcing geographical differences. For example, some states have average salaries significantly higher than the national average, such as Massachusetts or New York, while others like Mississippi have lower averages. This means an $87,000 salary would be considered more robust in a state with lower average incomes and less so in a high-income state.

Industry and Occupation Averages

Industry or occupation averages also offer a comparative benchmark. For instance, the tech sector generally offers higher average salaries, while service industries tend to have lower pay. A financial analyst, for example, had an average salary of $85,000 in 2024, making $87,000 align closely with that profession’s typical earnings. These statistical comparisons allow individuals to gauge their income against various benchmarks, providing a factual basis for evaluation.