Aussie sparks debate after claiming a $200k salary is the new $100k as the cost of living continues to soar
An Australian worker has sparked debate on social media after claiming the aspirational middle class salary has doubled from $100,000 to $200,000 a year.
The Melbourne native said on social media this week: “When I was working in my 20s it was all about creating a path to a $100,000 salary.”
“It felt like that was necessary to afford a middle-class lifestyle, but I would say inflation and housing affordability have pushed that to $200,000.”
Someone with an income of €200,000 would do that by earning double the average full-time salary of €95,581, or triple the average salary of €65,000.
Anyone over $180,000 is already in the top tax bracket, with only four percent of incomes falling into this zone.
The Australian added: ‘Now that I’m in my late 30s, I’d suggest you’re middle class up to $300,000.’
Households with a mortgage in particular are feeling the cost of living falling after a series of interest rate increases by the central bank (stock image)
People had different opinions on whether that was considered a middle-class salary, but most agreed that the cost of living for the household had increased dramatically.
“Amazing how just ten years ago my wife and I could live on $70,000 or less,” said one.
“Now that we’ve earned about $250,000 on the average cost of living and learned a lot more, it seems like we can afford everything we need.”
Another agreed, saying, “My wife and I were doing just fine with 85k ten to fifteen years ago. Now at 200,000, and what the extra $100,000 a year gave us was more stability.”
However, one argued: “$100,000 is a lot of money. How much stuff do you need?’
“Yes, $200,000 is more than what the vast majority of the world makes,” agreed another.
“The key is always to live below your means. It’s amazing how well you can live when you don’t have huge car, phone and mortgage costs that are twice what you can actually afford.”
Another said: ‘100K is probably fine for an individual, but a family would need 200K or more to be comfortable. 300K if you want to live comfortably and invest well.
A fifth said: ‘If you have two ‘professionals’ you get 200,000 in family income. A household of 200,000 is MORE than enough, everywhere except the big cities.
“But cities are quickly losing their appeal, especially as the cost of living is worth it, and with everything becoming more and more remote, anyone who can is simply moving away.”
A sixth stated: ‘I agree but obviously it’s very location dependent. In most areas where a 200k salary is possible, I think you’re right.
‘Remote working makes that a lot easier, so if you live in a relatively cheap rural area but work remotely in the 100,000 to 150,000 range, you could make a very good living.
Meanwhile, a seventh claimed: ‘As a single income earner, $200,000 probably keeps you in the middle class simply because most will spend more to live better lifestyles such as travel, sole proprietorships, restaurants etc.
“A couple making $200,000 each ($400,000 combined) certainly pushes you above the middle class, assuming an average of 2.5 children, without mitigating medical costs.”
Another said, “I agree that in the 1990s when I was a kid, $100,000 was a lot of money, like a nice house, a big RV, and boat money.
‘Now 100,000 is relatively comfortable, you can afford a decent apartment and save some money at the end of the month.
“If my partner and I both made $200,000, we could easily own a house and put a lot of money toward retirement, so yeah, I agree.”
The Reserve Bank’s series of rate hikes have hit Australians with mortgages particularly hard, pushing up monthly repayments by thousands of dollars on average.
These households would typically fit into the $100,000 to $200,000 income range, with lower incomes less likely to be purchasing homes and higher incomes likely to have paid off their mortgages.
House prices have stabilized somewhat, but the tight rental market is still driving rents up
This month’s inflation numbers have been pushed slightly higher by the increase in gasoline prices, but it is likely not enough to get the RBA to raise rates again.
The consumer price index (CPI) for August was 5.2 percent on an annual basis, compared to 4.9 percent in July.
The annual growth of the indicator, which tracks the cost of buying the same basket of goods and services over time, was in line with market forecasts.
Most observers expected inflation to pick up again after higher prices at the gas pump.
Car fuel prices rose by 9.1 percent in August and by 13.9 percent over the year.
In addition to fuel prices, which fall under the broader transportation category, housing, food and insurance were the other major drivers of the annual increase.
The overall housing category fell slightly, with new home prices posting the weakest annual increase since August 2021, reflecting declining construction material costs.
However, the tight rental market ensured that rents remained higher.
Treasurer Jim Chalmers believes the peak of inflation is over.
“While inflation remains higher than we would like for longer than we would like, it is expected to continue to moderate over the coming year,” he said.
Inflation was the main focus of the government to prevent the increase in power bills, he said.
Treasurer Jim Chalmers said the peak of inflation is over and prices should stabilize
Shadow Treasurer Angus Taylor said the The government should do more to rein in spending and ease pressure on inflation, he said.
“Labor must treat inflation as priority one, two and three,” he said.
EY senior economist Paula Gadsby said the Reserve Bank would likely look past stronger fuel prices given expectations and minutes from the last board meeting, but that services inflation would persist as a risk factor.
The figures were still close enough to the RBA’s own forecasts to leave rates unchanged in October, she said.
“But the Reserve Bank will be prepared to strike if productivity does not improve and inflation in the services sector remains more persistent than expected,” she said.
‘The risk of another rate hike remains, but our core expectation is that the Reserve Bank will remain tight.’
The quarterly inflation print, due at the end of October and after the next interest rate meeting, will give the RBA a more complete picture of the inflation challenge.