One in five households earning at least $150,000 a year are currently living paycheck to paycheck, per Bank of America, BAC
One in five households earning at least $150,000 a year are currently living paycheck to paycheck, per Bank of America, $BAC.
Due to rising essential expenses and, for many, the costs of maintaining costly homes, one in five households earning at least $150,000 annually are now living paycheck to paycheck, according to a Bank of America report based on U.S. spending data and account information in October. Living paycheck to paycheck, per BofA, means spending over 95% of income on essentials like food, utilities, childcare, and housing.
Unsurprisingly, households with annual incomes under $50,000 are the largest segment of those living paycheck to paycheck, making up 35% (up from 32% in 2019). As income rises, this percentage decreases.
High-Income Strain: ‘How is this possible?’
Even six-figure earners often find themselves scrambling to cover their expenses. A MarketWatch survey of high earners earlier this year supports BofA’s findings, pointing to the impact of “lifestyle creep.” According to the Bank of America report, “Households living paycheck to paycheck either have higher necessity spending, lower incomes, or both,” adding that such households spend over 90% more on necessities than those not living paycheck to paycheck.
Another factor: at higher income levels, necessity spending can increase and even outpace salary. For instance, BofA notes that “higher-income households may have bought larger, more costly homes, resulting in bigger mortgages.” These bigger homes bring larger expenses, including insurance, property taxes, utilities, and upkeep.
Time’s Toll on Finances
Troublingly, the proportion of paycheck-to-paycheck households tends to increase with age. Retired baby boomers have the highest rate of living paycheck to paycheck among age groups, while Gen X has the highest share among those still working. BofA’s findings also show that Gen X households often carry the highest necessity spending levels.
Across demographics, the proportion of paycheck-to-paycheck households has risen since 2019, now encompassing one in four households. Although inflation has eased somewhat, it remains high enough to cause lasting financial strain for many working Americans.