40% of Workers Earning Over $300,000 Live Paycheck to Paycheck, Goldman Finds
40% of $300,000 earners live paycheck to paycheck
Roughly 40% of workers earning over $300,000 a year say they are living paycheck to paycheck, according to Goldman Sachs Asset Management's retirement survey research, reported by Barron's and Yahoo Finance.
The pattern is U shaped. Financial strain eases through the middle income brackets, then rises again at the top. About 41% of households earning $300,000 to $500,000 reported living paycheck to paycheck, and the rate was 40% for those earning above $500,000, compared with just 16% for households earning $200,000 to $300,000, the lowest rate of any group.
"One of the more remarkable findings is whether or not financial security improves linearly with income," Chris Ceder, a senior retirement strategist at Goldman Sachs Asset Management, told Yahoo Finance. "It does for a while, but it's a U shape pattern."
The financial vortex
Goldman calls the squeeze the "Financial Vortex." Since 2000, the cost of home ownership has risen from 21% of income to 36%, childcare from 10% to 25%, private university tuition from 9% to 33%, and family health insurance from 12% to 33%.
About 40% of all working Americans surveyed reported living paycheck to paycheck, and nearly 60% said they were concerned about outliving their retirement savings. Among respondents, 67% said too many monthly expenses were hampering retirement saving.
Planning appears to help. Among workers with a personalized financial plan, 83% believed they were on track for retirement, compared with 41% of those without one. A separate Goldman survey found 72% of employers now rank financial stability and retirement readiness as a top priority.
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How this could hit the options market
Stretched high earners are a mixed signal for markets. Weak retirement saving at the top of the income ladder pressures long duration demand for equities, while continued spending supports consumer names like AMZN and COST in the near term.
Credit stress at high incomes is worth watching in V, MA and lenders like JPM, since minimum payment behavior at the top bracket has historically been an early warning sign. Put flow in financials after consumer credit data is the tell.
Wealth managers such as GS itself benefit from demand for planning. Call flow in asset managers after survey releases like this one often previews that rotation.
Track consumer stress signals in the flow and Sign up for Unusual Whales before the next credit report lands.