The real cost of living: Would $150,000 make you happy?

As we in Los Angeles gather for the TogetherLA conference Feb. 26-28, I can’t help but think that at some point churches need to get together to talk about not only housing for those experiencing homelessness like my friends at Union Rescue Mission, but also housing for the working professionally but unable to get ahead. Making $100,000 in today’s economy is worth 20% less considering inflation (roughly $80,000) (see my next post for the posting of this now outdate link). This article from MSN seems to be missing from their site so I’ve posted it in entirety below as one perspective to get us thinking about how expensive it is to live in major cities like┬áLA.

The article says that Americans they polled resulted in needing $150,000 for them to be able to live comfortably, and if you were to consider how far $150,000 would go in Peoria, IL, what would it take in another major city? For Los Angeles I calculated that number to be over $200,000. Of course this is unattainable by the vast majority of the people we interact with daily (at least for me). What do you think? Thanks to my friend Therese for getting the conversation started on Facebook today!
The divide between the 1% and the 99% has ignited a national debate about the income gap, especially since Occupy Wall Street protesters descended on lower Manhattan last fall. But how much money does it take to feel financially secure these days?

The answer, at least according to a new survey of Americans by WSL/Strategic Retail, is $150,000. That level of income is more than three times the national median of $49,445 for 2010, and it’s enough to put a household into the top 10% nationally.

The survey asked respondents to choose which of four categories best described them: I can’t even afford the basics; I can barely afford the basics and nothing else; I can afford the basics plus some extras; and I can afford the basics and the extras, and I’m able to save, too. It is only at that $150,000 level that the survey found the vast majority of consumers, 88%, saying they could buy what they need, afford some extras and still be able to save a bit.

Even as the economy improves and consumer confidence builds, more than half of Americans — 52% — feel like they can afford just the basics, and many with six-figure incomes still feel like they are scraping by. The survey found that 18% of U.S. households earning from $100,000 to $150,000 said they could afford only the basics, with an additional 10% saying they sometimes can’t afford even those staples.

“We clearly have what used to be upper middle income — 75 to 150k — folks who are saying it just isn’t so,” says Candace Corlett, the president of WSL/Strategic Retail. “A quarter of them are saying, ‘I can barely afford the basics.'” So while six-figure incomes used to represent affluence, that’s no longer the case.

Of course, as The Fiscal Times has written before, in many parts of the country, an annual income of $250,000 could easily leave a typical family in the red once all their expenses and taxes are factored in.

That $150,000 is based on average costs for housing, food, clothing, etc. — perhaps in a place like Peoria, Ill. If it takes that kind of money to have a decent middle-class life in Peoria, what would it take to match it in a major metropolitan area?

We used Bankrate’s cost-of-living comparison calculator to measure the difference between Peoria and other cities and chose five of the top 10 U.S. cities (not just the top five) with the highest costs of living, according to Kiplinger. We added Chicago to represent the middle of the country.

The New York City area was the most expensive. Equivalent income: $337,311.87. Percent increase to maintain standard of living: 124.9%.
Honolulu area. Equivalent income: $258,099.19. Percent increase to maintain standard of living: 72.1%.
San Francisco area. Equivalent income: $255,409.43. Percent increase to maintain standard of living: 70.3.%.
San Jose, Calif., area. Equivalent income: $243,260.85. Percent increase to maintain standard of living: 62.2%.
Washington, D.C., area. Equivalent income: $218,127.70. Percent increase to maintain standard of living: 45.4%.
Chicago area. Equivalent income: $182,045.06. Percent increase to maintain standard of living: 21.4%.
The struggling economy has clearly created a recession mindset among consumers. When asked how long the recession will continue, 80% of people say three years or more, Corlett says — up from 43% back in 2010. “They may not literally mean the government’s definition of a recession, but they certainly mean a recessionary mindset for them,” Corlett says.

Those financial pressures have made consumers much more cost-conscious. Three-quarters of women now say it’s “important to get the lowest price on everything they buy,” up 12 percentage points from 2008 and 22 percentage points from 2004. To that end, more are using coupons (68% vs. 61% in 2010) and buying only when items are on sale (45% vs. 38% in 2010).

And, perhaps unsurprisingly, young people — those from the ages of 18 to 34, who have long been the prized target of marketers — were more likely than other age groups to say they don’t have enough money to cover their basic needs. Nearly a quarter of those surveyed put themselves in that group, compared with 17% of those age 35 to 54 and 13% of people 55 or older.

An IRS breakdown of U.S. incomes, released the day after the consumer survey, provides a reminder of why people, even those with six-figure incomes, may be feeling poorer. For tax year 2010, adjusted gross incomes reported to the IRS rose 5.2% to $8 trillion total — the first increase after a couple of years of declines. But while tax filers making more than $250,000 saw their total incomes climb almost 14%, those earning from $50,000 to $100,000 gained just 1.5%.

*The article was originally here but no longer a working link: http://money.msn.com/family-money/article.aspx?post=c20e622f-9f80-4b2d-90fd-164ead94b9b1

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