Is Making $98,000 a Year a Good Salary?
Explore the true worth of a $98,000 salary. Its value is shaped by individual circumstances, location, and broader financial realities.
Whether an annual income of $98,000 is considered “good” is subjective. Its value depends on individual circumstances and external economic factors. What feels comfortable for one person may be insufficient for another.
The Role of Location and Cost of Living
The geographical location significantly impacts the purchasing power of a $98,000 salary. Major metropolitan areas and certain states typically have a much higher cost of living compared to rural regions. Housing expenses, including rent or mortgage payments, represent a substantial portion of a household’s budget and can vary drastically. In some high-cost areas, housing can be three times the national average, while in lower-cost states, it might be considerably less expensive.
Beyond housing, other everyday expenses like transportation, groceries, and utilities also contribute to the overall cost of living. These categories fluctuate based on local market conditions and regional pricing. For instance, a state with a cost of living index of 185.9 is nearly 86% more expensive than the national average, whereas another with an index of 86.3 is about 14% cheaper. Understanding the specific cost of living in one’s area is crucial for assessing the real value of a $98,000 income.
Personal Financial Context and Goals
An individual’s personal financial context and aspirations play a significant role in evaluating a $98,000 salary. Existing financial obligations, such as student loan debt, credit card balances, or car payments, directly reduce disposable income. The presence of dependents, like children, also introduces additional expenses for childcare, education, and healthcare. These factors can place considerable demands on an income.
Personal financial goals also influence how a salary is perceived. A person aiming to save aggressively for a home down payment, retirement, or a child’s education will view their income differently than someone with fewer savings objectives. Creating a detailed personal budget allows individuals to track income against expenses and align spending with long-term financial plans. This approach provides clarity on whether a $98,000 salary supports their desired lifestyle and future ambitions.
Navigating Taxes and Deductions
A gross annual income of $98,000 is not the amount an individual receives in their bank account; mandatory deductions reduce it to net, or take-home, pay. Federal income taxes are withheld from earnings, with rates structured progressively. For example, in 2024, a single filer’s income between $47,151 and $100,525 falls into the 22% federal tax bracket.
Employees also contribute to Social Security and Medicare through Federal Insurance Contributions Act (FICA) taxes. The Social Security tax rate for employees is 6.2% on earnings up to $168,600 in 2024, while the Medicare tax rate is 1.45% on all earnings. Other common pre-tax deductions can further reduce taxable income, including contributions to retirement plans like 401(k)s or IRAs, and health insurance premiums. These deductions collectively result in a take-home pay notably less than the gross salary.
Comparing to Broader Income Landscapes
Placing a $98,000 salary within the broader economic context of the United States provides perspective. For full-time workers, the median weekly personal income in the U.S. was approximately $1,165 in the third quarter of 2024, translating to about $60,580 annually. The average individual income in 2023 was $101,805 before taxes. This indicates a $98,000 salary is generally above the median individual income for full-time workers.
When considering household income, the median household income in the United States was around $80,020 in 2024. A $98,000 income therefore places a household comfortably above the national median. The true measure of a salary’s adequacy remains tied to specific living costs and personal financial circumstances.