$100k a Year Is the New Poor (Only Half Joking)

My wife and I were talking the other night about money; the way you do when you're self-employed and the income comes in waves instead of a steady line. Ten years ago, a household income of around $150-160k felt genuinely comfortable. Right now, even sitting under $200k while we're mid-way through some business ventures, and even with low debt, which helps enormously, it doesn't feel like the same $150k did a decade ago.

So we started doing some rough maths. And the more we ran the numbers, the more we landed on a half-joke that isn't that far from true: $100k a year might genuinely be the new poor.

Here's why.

The House Math

If you bought a house in the last five years, there's a good chance you paid roughly double what the same quality home would have cost a decade ago. Nationally, house prices have more than doubled since the mid-2000s. In Sydney and Melbourne specifically, prices have doubled again in just the last ten years alone.

To make this concrete, let's compare two households; one buying ten years ago, one buying recently. We'll ignore deposits entirely and just look at the debt, since that's the part that actually shows up in your monthly budget.

Household A — bought 10 years ago: $200,000 household income, $425,000 house (100% debt), average mortgage rate at the time around 4.5%.

Household B — bought recently: $300,000 household income, $900,000 house (100% debt), current average variable rate around 6.9%.

	10 years ago	Now
Household income	$200,000	$300,000
House price (100% debt)	$425,000	$900,000
Monthly mortgage repayment	$2,153	$5,939
Annual mortgage repayment	$25,841	$71,273
Income tax (household)	$49,894	$73,676
Net income after tax	$150,106	$226,324
Left over after tax & mortgage	$124,265/yr ($10,355/mo)	$155,051/yr ($12,921/mo)
Mortgage as % of gross income	12.9%	23.8%
Mortgage as % of net income	17.2%	31.5%

 

The number that actually tells the story isn't the dollar figures, it's the percentages. The mortgage went from eating 17% of net income to eating 31.5% of it. Household income only grew 50%, but the share of it swallowed by housing costs nearly doubled. The Household B family still ends up with more raw dollars left over each year than Household A did, but a far bigger slice of their pay packet is spoken for before anything else happens. That's the "comfortable" feeling eroding, even while the numbers on paper look fine.

The Grossed-Up Bit Nobody Talks About

Here's the part that made this hit differently once we actually ran it: a mortgage is paid with after-tax dollars. So if someone's carrying, say, an extra $500,000 of debt compared to what they'd have needed a decade ago, that's roughly an extra $3,000-3,500 a month in repayments — call it $39,600 a year.

But you don't earn $39,600. You earn whatever it takes, pre-tax, to net that amount after the ATO takes its cut. At the 37% marginal rate, that means finding an extra $62,857 a year in gross income just to service the extra debt. Even at the 30% bracket, it's still $56,571.

So "an extra $500k of debt" isn't really a $500k problem. Once you account for what it actually takes to earn the money to service it, it's closer to a $600k problem. Nobody puts that number in the affordability conversation, but it's the one that actually explains why people earning genuinely good money still feel stretched.

The Tax Side Nobody Adjusted For

While all of this was happening to house prices, our income tax brackets have barely moved in twenty years. Australia is one of only four OECD countries that doesn't automatically adjust tax thresholds for inflation. We had one meaningful round of tax cuts in that entire window, the Stage 3 cuts, and that's it.

The practical effect is bracket creep: as wages rise to keep pace with inflation, more of that income gets pulled into higher tax brackets, even though people aren't actually any better off in real terms. The average tax rate in Australia is on a trajectory to hit an all-time high within the next decade, purely from this effect, no new taxes required, just a system that hasn't been adjusted while everything around it has moved.

So the squeeze isn't just coming from one direction. House prices roughly doubled. Mortgage repayments, once grossed up for tax, cost even more than they look like on paper. And the tax system itself has quietly become a bigger drag with almost no corresponding relief.

And While We're At It

In the same period, the weekly grocery shop went up around 45%. We won't even get into electricity, the data's such a mess of rebates and reversals that nobody can give you a straight answer on what it's actually done over ten years. Groceries up 45%, our patience down considerably more, and our will to live, well, you know.

So, is $100k the New Poor?

Not literally; plenty of people on $100k are doing just fine, particularly without a large or recent mortgage. But the joke lands because it's not that far from the truth for a specific group: anyone who's bought a home in the last five years, is earning what used to be considered a strong household income, and still feels like they're treading water.

The old benchmarks for "comfortable" haven't been updated. $150-200k used to be the number. Based on what house prices, mortgage costs, and quiet tax creep have done since, something closer to $300k is probably the more honest comparison today, assuming you've bought into the current market.

None of this is a call to panic, and it's definitely not a complaint from people who know they're still doing okay. It's more of an observation: the goalposts moved a lot further than most people's mental benchmark for "comfortable" has caught up to. If your income has grown but you still feel behind, it might not be you. It might just be that the number that used to mean "doing well" doesn't mean that anymore.

Feeling like you're working harder for the same lifestyle?

Want to talk through what this means for your situation? Get in touch with Funded Futures Financial Planning.

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