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Places Where You Can Earn Six Figures and Still Be Broke in 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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A household bringing in $100,000 each year should be on firm financial footing. But depending on where you live, that amount might be barely enough to scrape by — or might not even be enough to cover the basics. Taxes, housing, transportation and other typical expenses can easily eat up six figures a year in certain cities, leaving families strapped for cash, according to a recent analysis by MagnifyMoney.

For this study, we looked at data from the U.S. Department of Housing and Urban Development (HUD)’s Location Affordability Index (updated in March 2019), which also uses data from the 2012-2016 American Community Survey, to see which cities would leave a dual-professional households earning $100,000 with little to no disposable income. We considered the average cost of housing (e.g. insurance and taxes), transportation (e.g. car payments, parking, tolls, bus fare, etc.), childcare, food, retirement contributions, utilities and other line items in a typical family’s budget.

After tallying up all of the expenses, we were able to calculate the disposable income of families living a typical six-figure lifestyle in various metro areas around the United States. Then, we ranked the top cities where families earning $100,000 a year would have the least (and most) amount of money leftover at the end of the month. Here’s what we learned.

Key takeaways

  • In San Jose, Calif., considered the capital of Silicon Valley, a joint income of $100,000 with a preschool-aged child means a couple may have to run up their credit cards $1,046 a month just to cover what the typical two-earner household spends on the basics (not including compounded interest on that credit card debt).
  • In seven of the 100 metro areas we reviewed, the average professional couple spends more than $100,000 on the basics.
  • In McAllen, Texas, a couple earning $100,000 can expect to have around $1,795 left over every month after paying the typical bills for a local dual professional household.
  • Seven of the 10 places where couples can expect the most disposable income are in Texas, Florida and Tennessee, where there’s no state income tax.
  • More than half of married couples have six-figure incomes in 19 of the 100 metros we reviewed.

Worst places in the U.S. to make six figures

Although rising incomes are outpacing housing cost increases, according to one of our previous studies, families in certain metros are continuing to struggle to make ends meet — even after pulling six figures. In seven of the 10 worst cities in the U.S. to make six figures, a household income of $100,000 isn’t enough to cover basic expenses.

For example, in Oxnard, Calif., a coastal city in Southern California, families need to scrounge up another $195 to break even each month. Meanwhile, those in the northern California city of San Jose have a whopping total of $1,046 in unmet expenses each month.

Things get slightly better as families head east. Those in the Big Apple have about $65 in disposable income each month (not even enough for the average Broadway show ticket). But families making $100,000 a year in Minneapolis have an extra $149 to play with after expenses, so at least not all Minnesota families are doomed after making six figures.

Breaking down the expenses by line item can give you a sense of what’s costing families the most in these metros.

The majority of household budgets is devoted to housing, transportation and childcare. Housing was the single largest expense in the top 10 places where you can earn six figures and still be broke, with families in San Jose, Calif., paying the most ($2,760 each month) and families in Worcester, Mass., paying the least ($1,779). Transportation ate up the second largest portion of the budget, ranging from $1,082 to $1,532 depending on the city, with childcare costing slightly less.

Best places in our rankings to make six figures

Everything’s bigger in Texas — including the amount of disposable monthly income for families making $100,000 a year. In McAllen, a city along the state’s southern border, households have $1,795 left in their bank accounts after covering basic expenses; meanwhile, families in the western city of El Paso have just slightly less ($1,679) to spend at the end of the month.

Cities in Florida took third and fourth place, followed by Tennessee metros in fifth, sixth and eighth place. No city in our list of the top 10 places where you can earn six figures and still be flush left families with a surplus of less than $1,400.

A relatively low cost of housing helps families keep more money in their pockets in the best places to make six figures; none of the average households in the top 10 metros spent more than $1,299 to keep a roof over their heads. Families in McAllen, Texas, barely pay more than four figures for housing, which costs $1,004 a month on average.

Seven of the top cities are in places with no state income tax, giving families another roughly $200 to $400 to play with each month, compared with those in the worst cities for families earning $100,000. Childcare was also significantly less in these cities, ranging from $514 to $694 a month, roughly half (or less) of what families making $100,000 pay in the most expensive city, San Jose, Calif.

Our full rankings

Check out the full rankings of the 100 places where you can earn six figures and still be broke (or flush).

For the most part, the percentage of the population that makes over $100,000 in these cities inversely correlates with the average amount of disposable income those families have. None of the average families making $100,000 in these 100 cities saw housing or transportation fall below four figures, making those categories the most significant line items in everyone’s budgets.

Overall, families on the East Coast and West Coast tended to have less disposable income than households in other parts of the country.

Understanding the metrics

There are a few changes to the methodology in our 2019 study. We focused on the largest 100 metros this time around as opposed to some 381 metros last year. We also took a more detailed approach to calculating variables that impact a family’s disposable income.

We based our case study on a family earning a gross income of $8,333 per month. Then we subtracted their monthly expenses, debt obligations and savings to come up with an estimate of how much cash they’d have left over at the end of the month.

These are the assumptions we made for this study:

Savings. We assumed the family contributed $500 monthly to their 401(k). In previous years, we assumed the family set aside 5% of their savings in a regular savings account. This year, we changed the savings to 401(k) contributions because it’s something of a bastion of corporate middle-class personal finance, and it offers a tax benefit.

Tax assumptions. Our study assumes the couple will file jointly for 2019. They took the standard federal deduction and received a federal $2,000 credit for their one child. They also took the standard deductions and credits offered by their state, and took advantage of the pretax Dependent Care FSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer. The couple had insurance premiums paid from their pretax income by their employer and their 401(k) contributions paid from their pretax income by their employer.

Debt. We assume the family had a monthly student loan payment of $393 — the median student loan payment according to the Federal Reserve — in order to be consistent with the other metrics (which also look at the mean). Housing and auto debt are bundled in with the housing and transportation cost budget line items in monthly expenses.

Monthly expenses. We based monthly expenses — housing, transportation, food, utilities, household operations, child care and entertainment — for each location on data taken from the Bureau of Labor Statistics, the Department of Housing and Urban Development, Care.com, Kaiser Family Foundation and the Federal Reserve. We calculated an average for these expenses taking into account the lifestyle costs of a six-figure earner. We also removed entertainment and combined household expenses with housekeeping supplies and apparel. The cost of apparel is the average amount for a woman, man and child under the age of 2 in each metro.

Compared with last year, we beefed up the monthly necessity expenses — although by no means hit them all — by adding costs like household operations costs and utilities to get a more realistic sense of how much people would have left over after paying their basic bills.

Unfortunately, we haven’t located updated childcare costs compared to last year, so that remains the same in our numbers, but is likely to have increased. We’ve also added the average (mean) income for married couples in each metro, as well as the percentage of married couples in each metro with incomes over $100K.

Further, while the median cost of each expense would have painted a more accurate picture of what half the population experiences, this data only included the average, or mean, of the metrics, so the results may overstate what typical people earn and pay, especially for housing and transportation. With that being said, we recognize we may be lowballing some expenses a typical family faces. For example, our data on health insurance includes monthly premiums, but not copays for visits to the doctor and the cost of prescription drugs.

Methodology

The hypothetical family we created is a typical one that earns a combined income of $100,000 (the average income for a married-couple family in 2017 was $110,786 (the median was $85,031), and 41% of such couples earned at least $100,000 that same year).

We were conservative about the couple’s financial and debt obligations by making the following assumptions:

  • Both have corporate-style employers who offer typical benefits.
  • They have one child currently in day care.
  • Between them, they contribute 6% of their income to their 401(k)’s to maximize typical matching, which is considerably less than the median rate of 10% from an employee in a matching plan (page 7).
  • Only one of them has student loans and is making the average payment of $393 a month. (Student Loan Hero and MagnifyMoney are both owned by LendingTree.)
  • The entire household is on one person’s group insurance plan.
  • The family has average spending habits and expenses for where they live.

To calculate federal and state taxes, we assumed the following:

  • The couple will file jointly for 2019;
  • Took the standard federal deduction;
  • Received a federal $2,000 credit for their one child
  • Took the standard deductions and credits offered by their state;
  • Took advantage of the pre-tax DCFSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer;
  • Had insurance premiums paid from their pre-tax income by their employer;
  • Had their 401(k) contributions paid from their pre-tax income by their employer.

The following variables were used to create their hypothetical expenses (each is the average cost for the geography indicated in parentheses):

  • Federal tax contribution (national, but adjusted for state average health care premiums)
  • State tax contribution (state)
  • FICA contribution (national)
  • 401(k) contribution (national; see notes on assumptions)
  • Insurance premiums for family coverage (state)
  • Housing costs for dual professional families (MSA)
  • Transportation costs for dual professional families (MSA)
  • Food costs (regional)
  • Utilities cost (regional)
  • Household operations, housekeeping supply, and apparel costs (regional)
  • Child care costs (MSAs where available (half of the MSAs), and state averages where not)
  • Student loan payments (national)

Sources include the Bureau of Labor Statistics; the Department of Housing and Urban Development; the Tax Foundation; Care.com; the Kaiser Family Foundation; the U.S. Federal Reserve; and the U.S. Census Bureau.

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The Most Popular Retirement Destinations for Seniors

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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Many of us look forward to that sweet day when we’ll never have to set an alarm again. You have no boss, no deadlines and no meetings. Most of us would agree that retirement sounds pretty awesome. Which is why it is so important to plan for it properly.

When it comes time to choose where to live, cost of living and general livability for retirees are typically the two main concerns. In past studies, we have endeavored to look at a cross section of retirees’ concerns, so we can rank the best places to retire. But sometimes, the best places to retire doesn’t always line up with where retirees actually move. We hope to shed some light on senior retiree preferences by finding the top retirement destinations. Here’s a look at the most tempting locations.

Key findings

  • The top 25 retirement destinations is dominated by Arizona and Florida metros. Those two states account for 15 of the 25 metro areas with highest net migration of retirees.
  • The Phoenix metro area was the runaway favorite. This area attracted 19,550 new seniors. Only about 12,421 opted to leave. That left a net influx of 7,129 retired seniors making Phoenix their home.
  • Only two metro areas not in Arizona or Florida made it to the top 10: Milwaukee and Nashville, Tenn. Milwaukee saw a net influx of 3,924 retirees, while Nashville gained 2,831.
  • The busiest and least-affordable metros saw the largest loss of retirees. Cities like New York, Los Angeles, Seattle and San Francisco tend to lose those who left the workforce. This exodus of retirees does slightly help balance population crises in cities like San Francisco which lost 2,731 retirees.
  • Weather and a sense of “affordability” aren’t the only factors attracting retirees. Florida and Tennessee in particular, and Arizona to a lesser degree, have extremely retiree-friendly tax laws. Florida does not tax any kind of retirement income and has relatively low property and sales taxes. Likewise, Tennessee does not tax social security income, which, apart from the BBQ and music, may explain why Nashville is a top 10 retiree destination.
  • California experiences the biggest loss of retirees. Of the 18 California metro areas we analyzed, 14 saw a net decrease in retirees.

Most popular retirement destinations

Phoenix stole the number one spot that retirees are flocking to. But if you prefer less desert and more beach, Tampa, St. Petersburg and Clearwater, Florida came in second place. If you’d take a lake over a beach any day, Lake Havasu City in Arizona made its way into the top 10. And thanks to their low cost of living, midwestern cities may be the perfect place to spend your golden years.

If the top 10 is sounding a little crowded for your taste, you could hop on over to the Pacific Northwest. Slightly less popular – but still highly ranked – is Portland and surrounding metro areas in Oregon and Washington. The Portland-Vancouver-Hillsboro area in Oregon and Washington ranked 11th place. And Eugene, Oregon was also highly ranked as the 19th most popular retirement destinations for seniors. We have to say, Portland has a pretty stellar reputation. We found in a previous study, that Portland ranks seventh as one of the best places to live in America if you’re looking for a balanced lifestyle.

The South is looking mighty appealing too. Of course, plenty of spots in Florida made the list, but so did Nashville, Tenn. Who’s ready for some BBQ? If you desire even more southern charm, check out the Greenville-Anderson-Mauldin region of South Carolina.

Humidity got you down? Golden coast California didn’t make it into the top 10. Hint: high real estate prices. But sunny San Diego ranked 23rd, which is not too shabby.

Least popular retirement destinations

The New York metro area ranked number one in our list of the least popular retirement destinations for seniors. Chicago, Philadelphia and Los Angeles didn’t fare too well either.

Dream locations like Honolulu, Hawaii, and Orlando, Florida didn’t rank as highly as one would think. And on a not so surprising note, bustling metro areas full of workers bees weren’t desirable spots either. Apparently, there is a lot less need for early bird specials in Los Angeles, San Francisco, Atlanta, New York, Seattle and Chicago.

Be prepared for retirement with these tips

Preparing to retire is a big financial undertaking. One you should take seriously and plan for. Consider these tips as you prep for retirement.

Take advantage of catch-up contributions: If you find yourself over the age of 50 and getting ready to retire but fell behind on saving money, you may want to take advantage of catch-up contributions. Usually, the maximum contribution limit to a 401(k) is $18,500 and to an IRA is $5,000. But for those over 50 years of age, catch-up contributions are more flexible, allowing those total contribution limits to be $24,500 and $6,500, respectively.

Adjust your budget: Tightening your budget so you can see how you’ll live on your new income can help you prepare for the adjustment to life in retirement. You may want to consider saving for unexpected expenses like travelling, assisting family and friends and the potential need for medical care or the option of living in an assisted living facility.

  • The 4% withdrawal rule: Generally you’ll need to withdraw around 4% from your nest egg each year. This means that if you have $1 million saved for retirement, you would withdraw $40,000 each year for costs like food and medical supplies. This is just one way of looking at the expected cost of retirement.
  • 75% of income rule: You can also follow the principle of the 75% of income rule. This guideline advises that you should spend between 75% to 85% of your current annual income each year in retirement. Generally your expenses drop after retirement, so ideally this should be enough income for you to live comfortably.

Review and pay off debt: Taking care of debt before you retire is something to seriously plan for. Seniors with credit card debt have a net worth worth of 43% less than those without credit card debt. The high interest rates associated with credit cards can destroy nest egg income.

Because the average credit card interest rate is 14%, seniors who have credit card debt (on average, $4,786) will pay an average of $670 every year for interest charges. With the average investment portfolio not earning more than 8% every year, seniors will on average earn only $4,508 from their portfolio. Sadly, this means that credit card interest can eat up more than 15% of a nest egg income.

Methodology

Data comes from Integrated Public Use Microdata Series (IPUMS). In order to rank the top retirement destinations for seniors, researchers looked at two metrics. Specifically we looked at the number of residents over 65 who were out of the labor force who moved into a metro area and compared it to the number of over 65 residents who were out of the labor force who moved out of a metro area. Those two numbers were then combined to create a net migration figure. This study is ranked based on that net migration figure.

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Places Where Adults Still Live With Their Parents

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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Moving out of your parents’ home has long been considered the ultimate rite of passage into full-fledged adulthood.

But today’s young adults are more likely to live in a parent’s household — and to live with their parents for a longer period, according to the Pew Research Center. A range of potential explanations has been offered for this generation’s “failure to launch,” from a desire to prolong adolescence to an aversion to marriage and commitment.

While these factors might play some role, the reality for most adults ages 25 to 40 living with their parents is that they lack the money to move out and establish their own households. Some might be unemployed and looking for work, while some have left the labor force altogether. Other young adults have their own children and live with parents out of a need for child care and support.

MagnifyMoney wanted to find out where U.S. adults are most likely to still be living with their parents, and what factors could be holding them back from leaving the nest.

We surveyed the 50 largest metros in America to identify the largest portion of adults ages 25 to 40 living with their parents along with some other statistics about them. We excluded people in this age group who identified themselves as active students.

Key findings

  • In Riverside, Calif., 28% of adults ages 25 to 40 live with their parents, earning this city the No. 1 spot on our list. High unemployment among these young adults – and for the metro, more generally – appears to be a leading factor.
  • Young adults in Miami, Los Angeles and New York follow, with more than 1 in 4 residents ages 25 to 40 living in their parents’ home.
  • Minneapolis stands at the other end of the spectrum, with fewer than 12% of young adults in this age range living with their parents.
  • Seattle is another city with just under 12% of young adults (ages 25 to 40) living under their parents’ roofs. Then there’s a four-way tie for third place among cities where adults are least likely to live with parents: Denver, Indianapolis, Kansas City, Mo. and Raleigh, N.C. all have 12.3% of these adults living at home.
  • Across the board, about 1 in 4 adults living with their parents have children of their own in the home.
  • Men between the ages of 25 and 40 are more likely to live with their parents in every metro we reviewed (except Austin, Texas).
  • The average unemployment rate for this age group across the 50 metros is 8.6%. That’s more than twice the national unemployment rate of 4% as of January 2019.
  • Nearly 1 in 5 adults who live at home don’t participate in the labor market at all, on average across the 50 metros.
  • Adding together the unemployed and the people who don’t participate in the labor force, only 72% of these adults are currently working while living with parents.

Understanding the metrics

The list is ranked strictly on the percentage of adults aged 25 to 40 who live with their parents. To inform our findings, we also present the following information for this same population (which did not affect rankings). We excluded anyone from the analysis who was identified as a student.

  • Percentage who have their own children at home.
  • Percentage who are unemployed. This refers to people who want to work but are unable to find work. They are part of the active labor force in their communities.
  • Percentage who don’t participate in the labor force. These are people who don’t work outside of the home and are not seeking to work. This is different from the unemployment rate, and people counted in that rate are not included in this metric. We excluded people who are identified as students from our analysis as well, so these statistics don’t include people not looking for work due to educational pursuits.
  • Breakdown of people who live with their parents by sex.

In the 10 cities with the largest shares of young adults ages 25 to 40 living in their parents’ homes, eight were split between two regions: the South and the Northeast. In the South, more adults live with parents in Miami, San Antonio, New Orleans and Orlando, Fla. The four top cities in the Northeast include New York, Philadelphia, Providence, R.I. and Baltimore.

Here are some other highlights of these 10 cities with the highest portions of adults (ages 25 to 40) living with parents:

  • San Antonio, Orlando and Riverside had the highest rates of parenthood among young adults living with parents, out of the top 10 cities overall. In these cities, nearly three in 10 young adults who live at home with parents also live with a child of their own.
  • Of the top 10 cities where more adults are living with parents, the highest unemployment rates among this cohort are found in New Orleans (11.2%), Riverside (10.8%) and Baltimore (10.6%). In these cities, more than 1 in 10 of these adults living under their parents’ roofs are unemployed and actively seeking work.
  • The cities among the top 10 with the highest rates of nonparticipation in the labor force among adults living with their parents are San Antonio (25.3%), New Orleans (24.1%) and Orlando (19.5%).
  • Across the board, men make up the bigger share of adults who live with their parents, but the difference was more pronounced in some of the top 10 cities. In both Providence and Philadelphia, men make up a larger majority (56.7%) of adults living with parents. New York follows close behind, with a 56.2% male majority of adults living with their parents.

Then there are the cities where fewer adults (ages 25 to 40) are living with their parents, and are more likely to be living on their own. Four of these cities are located in the Midwest: Minneapolis, Indianapolis, Kansas City, Mo. and Columbus, Ohio. The South and West are also well represented in this list. In each region, there are three cities where these adults are less likely to be living in their parents’ homes.

Here is a closer look at other metrics that can inform these top 10 cities and their low rates of adults living with parents:

  • In these 10 cities, adults living with parents were more likely to be parents themselves, compared with the 10 cities where more adults live with parents. In Austin and Denver, 30% of adults living with parents had at least one child of their own living with them.
  • Raleigh and Indianapolis had the highest unemployment rates among these adults of the top 10 cities, at right around 12%. Austin and Kansas City had the lowest rates of unemployment among adults living with parents, at 5.4% and 5.6% respectively.
  • Among these 10 cities, Austin did have the highest share of adults living at home who aren’t participating in the labor force, however, at 22.5%. Portland and Indianapolis also had higher rates of labor nonparticipation among these adults living in parents’ homes, at just over 20%.
  • Minneapolis and Portland have the most uneven breakdown by sex of adults living with parents. Austin, on the other hand, is the only city we surveyed where a majority of adults living with parents are women, at 51.1%.

Full rankings

Our rankings surveyed the 50 most populous metro areas in the U.S. to find the proportion of adults (ages 25 to 40) living with their parents for each. See the table below for the full rankings for all 50 cities, along with key statistics on local adults who live with their parents.

How to prepare your money to move out on your own

Most adults living with parents hope to eventually move out on their own. If that’s you, careful planning can help you prep your finances, pay down debt and save enough money to make this happen sooner.

Here are some specific steps to take while you’re living with your parents to get financially healthy and launch your solo stage of life.

Make a plan to deal with debt

If you’re hoping to move out, you’ll have to deal with your debt first. The monthly payments on debt can be a burden that makes it harder to afford to live on your own.

Living at home is the perfect time to make extra payments toward debt and pay off some balances. Target your high-interest debt first, such as credit cards — these balances will cost you the most to carry from month to month.

Paying down debt is a great start, but your payoff date might still be years away while you’re hoping to move out much sooner. In these cases, you could refinance or consolidate debt to adjust your monthly payments or even secure a lower interest rate. Here are some options worth looking into:

Seek out a better job or side hustle

Unemployment, underemployment or exiting the labor force are among the biggest reasons adults live with their parents — and can’t move out. The only way to find your next gig is to apply, so keep your hopes and efforts up.

Applying for jobs can be tough, however, especially if you’re met with rejections. If your efforts seem to be going nowhere, see what you can do to make yourself a more attractive job candidate. Read up on job-seeking advice and ask for feedback from mentors or potential employers to improve your resume and prep for your next opportunity.

On top of actively seeking new or better employment, you can also consider picking up a side hustle or part-time job. This can help you develop new skills, build a portfolio and avoid a gap in employment — all while earning additional income and keeping money coming in.

Take advantage of low-cost living with parents

Living with parents isn’t always easy, but it comes with one major perk: low costs. Most adults who live with parents do so to benefit from either sharing living costs or skipping typical bills such as rent, groceries or utilities.

This lack of costs leaves more of your money available to tackle other financial goals. You can start building your move-out fund, saving for expenses like a deposit on an apartment and purchasing furnishings for your own place. Having an emergency fund in place before moving out can also be a wise move. Or you can use savings from living at home to pay down student loans or other debt.

Whatever your goal, set your sights and start using your freed-up funds to work toward it.

Methodology

Analysts used 2017 American Community Census microdata hosted on IPUMS to calculate the following percentages for people aged 25 to 40 and who did not identify as students: 1) Percentage who live in the same household with at least one of their parents. For those who both do and do not live with their parents, we separately calculated: 1) Percentage who live with their own children, 2) percentage who are unemployed, 3) percentage who are not part of the labor force, 4) percentage who are men, 5) percentage who are women.