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- You’ll need a staggering six-figure income to live comfortably in Los Angeles: at least $136,207 if you’re paying rent or $150,391 if you own a house.
- The salary needed to live comfortably in Los Angeles has risen by more than $25,000 in the past year, due to rising annualcosts of transportationand utilities.
- Within California, the cities of San Francisco, San Jose and Los Angeles come with the highest cost of livingcomfortably.
Los Angeles is home to about 4 million people who enjoy the sunny weather, cultural diversity and acclaimed foodie scene. But the benefits of living in L.A. come at a steep price.
A GOBankingRates study determined the salary you’ll need to live comfortably in 50 major U.S. cities, and Los Angeles came in at No. 3 for the highest required salary for renters. You’ll need to make a salary of $136,207 if you’re paying rent — or $150,391 if you own your own home — to live well in L.A.
This isn’t the first year that the GOBankingRates study has determined you’ll need a six-figure salary to live comfortably in L.A. Check out the amounts needed to live comfortably from years past:
- 2016: $93,690
- 2017: $98,775
- 2018: $110,420
- 2019: $136,207 if paying rent, $150,391 if paying a mortgage
With a median household income of $54,501, it would seem that many who live in L.A. are living well above their means.
Housing costs alone would make a significant dent in necessary expenses, with a median annual rent payment of $37,656.
Find Out: How Much You Need to Live Comfortably in 50 Major US Cities
What’s Behind the Rising Cost of Living Comfortably?
Living in Los Angeles is notoriously pricey, but you might be surprised by just how much the basic living expenses will run you.Check out the cost of annual necessities by year below:
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| Annual Cost of Living Expenses in Los Angeles, 2016-2019 | |||||
| Year | Rent | Groceries | Utilities | Transportation | Healthcare |
| 2016 | $33,060.00 | $4,197.00 | $1,491.48 | $5,400.00 | $2,697.00 |
| 2017 | $35,064.00 | $4,014.36 | $1,596.36 | $5,449.00 | $3,264.00 |
| 2018 | $36,180.00 | $4,014.36 | $2,353.56 | $9,518.00 | $3,144.00 |
| 2019 | $37,656.00 | $4,363.00 | $3,605.84 | $18,290.16 | $4,188.80 |
Annual rent has steadily climbed into the high $30,000s. The costs of groceries, utilities and healthcare have also been increasing gradually throughout the past four years.
One outlier, though, is transportation — whereas annual transportation costs might have run you $5,400 in 2016, you’ll pay more than three times that in 2019 at $18,290.16.
To determine the figures for this study, GOBankingRates utilized the 50/30/20 rule, which assumes that 50% of income should go toward necessities, 30% should go toward discretionary spending and 20% should be saved.
The costs in the table above are all considered necessities. In 2019, Los Angeles natives will be paying $64,276.21 in annual necessities if they rent and $74,224.21 if they have a mortgage.
Of course, many city dwellers don’t need to earn six figures to make a living. But when you’re using a good chunk of your budget — if not all of your budget — on necessities, then you don’t have much left over to save for retirement or even go out to dinner to celebrate a special occasion.
Related: The Cost of Living Is Quickly Rising in These 20 US Cities
Los Angeles Isn’t the Only City Where You Need Six Figures to Live Comfortably
Out of the major U.S. cities where you will need to make at least six figures to live comfortably as a renter, six are in California. If you’re living in San Francisco or San Jose, you’ll need to make $164,213.54 or $143,670, respectively. Those figures are higher if you’re paying a mortgage rather than renting.
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It probably comes as no surprise that New Yorkers should also make well into the six figures to live comfortably in the Big Apple. According to the study, you’ll need to make $128,552.42 per year to pay for necessities and have money left over to save. Some other contenders were Honolulu ($125,329.30); Washington, D.C. ($122,933.82); Boston ($120,413.32); and Seattle ($115,722.24).
Also See: Why You Should Flee New York City When It’s Time to Retire
All in all, you need to make at least six figures to live comfortably in 13 U.S. cities. You’ll probably get along fine if you don’t make quite so much, but living comfortably will be a lot more feasible if you reside in one of these more affordable cities.
More on Living Comfortably
- 19 Tips to Living Well on A Budget
- How to Save Money on All Your Monthly Expenses and Bills
- This Is What a Comfortable Retirement Will Cost You in Every State
- Watch: 5 Smart Tips to Live Comfortably in an Expensive World
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Methodology: GOBankingRates found the cost of living in America’s 50 biggest cities by analyzing the following factors: (1) Cost of living index for groceries, utilities, transportation and healthcare sourced from Sperling’s Best Places. Each index was multiplied by the annual expenditure amount in each category from the Bureau of Labor Statistics’ 2017 Consumer Expenditure Survey, which measures household annual mean expenditures to determine the annual mean spending for each category; (2) Rent costs were sourced from Zillow’s February 2019 rental value index for single-family residences, and were multiplied by 12 to obtain an annualized yearly spending on rent; (3) Mortgage rates were based off of Zillow’s February 2019 median home value, and Zillow’s mortgage calculator was used to determine the monthly mortgage payment for each given city based off of the home value and a 30-year fixed loan. Mortgage payments were multiplied by 12 to obtain an annualized amount; (4) Median household income was sourced from the U.S. Census Bureau’s 2017 American Community Survey (this is income prior to being taxed). Once all the data was found, the annual expenditure amount was calculated by adding together the annual spending for each category. GOBankingRates found the annual expenditures for both people paying a mortgage payment and for people who are paying rent separately, and the median income was subtracted by annual expenditures for those paying a mortgage and those renting to see how much money is needed or left over for each city. GOBankingRates then used the 50/30/20 rule, which assumes that 50% of income should go toward necessities, 30% should go toward discretionary spending and 20% should go toward savings. The 50% income is the annual expenditure, and that amount was used to find the additional income needed for splurges and savings.
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As an expert in urban economics and cost of living dynamics, I can provide a comprehensive analysis of the information presented in the article. My extensive knowledge in this field allows me to dissect the factors contributing to the rising costs of living in Los Angeles and other major U.S. cities.
The article highlights the escalating financial requirements to live comfortably in Los Angeles, pegging the necessary income at a staggering six-figure sum. The figures, meticulously analyzed by GOBankingRates, showcase the nuances of living in a city known for its sunny weather, cultural diversity, and renowned food scene. The data not only indicates the current financial threshold for renters and homeowners but also traces the historical progression of these figures over the past few years.
Key Concepts and Analysis:
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Cost of Living Trends:
- The data outlines the annual cost of living expenses in Los Angeles from 2016 to 2019, breaking down expenditures into categories such as rent, groceries, utilities, transportation, and healthcare.
- Notably, the costs of necessities have experienced a steady increase, with transportation costs notably tripling from 2016 to 2019.
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Income Requirements:
- To determine the salary needed for comfortable living, the study employs the 50/30/20 rule, with 50% of income allocated to necessities, 30% to discretionary spending, and 20% to savings.
- The income thresholds for living comfortably in Los Angeles are $136,207 for renters and $150,391 for homeowners.
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Historical Perspective:
- The historical data indicates a substantial rise in the required income to live comfortably in Los Angeles over the past years. In 2016, the figure was $93,690, reaching $150,391 in 2019 for homeowners.
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Comparison with Other Cities:
- The article expands its analysis beyond Los Angeles, revealing that six other California cities, including San Francisco and San Jose, also demand six-figure incomes for comfortable living.
- Other major cities like New York, Honolulu, Washington, D.C., Boston, and Seattle are mentioned, emphasizing the nationwide trend of high-income requirements for comfortable living.
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Factors Driving Cost Increases:
- The article briefly touches on the factors behind the rising cost of living, attributing it to increasing annual costs of transportation and utilities.
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Methodology of the Study:
- The study's methodology is disclosed, involving factors such as the cost of living index, rent costs, mortgage rates, and median household income. It underscores the comprehensive approach taken to derive the income thresholds.
In conclusion, the information provided by GOBankingRates, as outlined in the article, reflects the intricate interplay of various economic factors influencing the cost of living in major U.S. cities, particularly Los Angeles. This analysis serves as a valuable resource for individuals contemplating relocation or those seeking to understand the broader economic trends shaping urban living expenses.
