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Greater than a 3rd of high-earning American staff really feel strapped for money — a share that has risen dramatically lately.
Thirty-six % of U.S. staff with salaries of $100,000 or extra reside paycheck to paycheck — twice as many who mentioned they had been in 2019, in line with a survey carried out by Willis Towers Watson, a consulting agency.
That is greater than the 34% of staff who earn $50,000 to $100,000 a yr who’re residing paycheck to paycheck, although decrease than the 52% of paycheck-to-paycheck staff with incomes of lower than $50,000, in line with the survey.
Nevertheless, the excessive earners are the one group that noticed a rise of their paycheck-to-paycheck ranks within the final three years.
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“Workers at increased pay ranges aren’t proof against residing paycheck to paycheck,” mentioned Mark Smrecek, the monetary wellbeing market chief for North America at Willis Towers Watson.
Willis Towers Watson polled 9,658 full-time staff from massive and midsize non-public employers in December and January 2022, earlier than the latest inflation readings.
The findings are just like a current LendingClub survey that discovered 36% of individuals incomes a minimum of $250,000 a yr stay paycheck to paycheck.
Inflation might push extra to stay paycheck to paycheck
Shortly rising prices for meals, transportation and different areas of family budgets might put additional stress on households’ skill to save cash, Smrecek mentioned.
The Shopper Value Index was up 8.6% in Could from a yr earlier, the highest inflation reading in about 40 years. The Federal Reserve raised its benchmark interest rate by 0.75 percentage points on Wednesday — the largest increase since 1994 — as part of an ongoing effort to rein in consumer costs.
“These numbers are likely to increase if we see these inflation results continue,” Smrecek said of people living paycheck to paycheck.
Housing expenses, debt present budget challenges
The drivers of financial stress differ depending on income. The highest earners cited housing expenses as the most acute challenge, whereas low earners were more likely to report difficulties with debt, for example, Smrecek said.
While the survey doesn’t break down specific housing expenses, employers have anecdotally pointed to increased costs for rents and mortgages as workers relocated residences during the pandemic, Smrecek added. Higher-income employees are more likely than lower earners to have jobs that allow them to work remotely.
Some financial planners recommend Americans who are strapped for cash try adopting a 50-20-30 rule to bring their spending into line. This involves allocating 50% of after-tax income to essential expenses, 30% to discretionary expenses, and the remaining 20% to savings, investment and debt reduction.
