Greater than a 3rd of high-earning American employees really feel strapped for money — a share that has risen dramatically in recent times.
Thirty-six % of U.S. staff with salaries of $100,000 or extra are living paycheck to paycheck — twice as many who mentioned they had been in 2019, in accordance to a survey performed by Willis Towers Watson, a consulting agency.
That is greater than the 34% of employees who earn $50,000 to $100,000 a 12 months who are living paycheck to paycheck, although decrease than the 52% of paycheck-to-paycheck employees with incomes of lower than $50,000, in accordance to the survey.
Nonetheless, the high earners are the one group that noticed a rise of their paycheck-to-paycheck ranks within the final three years.
“Employees at higher pay levels aren’t immune to living 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 giant and midsize personal employers in December and January 2022, earlier than the newest inflation readings.
The findings are related to a latest LendingClub survey that discovered 36% of individuals incomes not less than $250,000 a 12 months dwell paycheck to paycheck.
Inflation could push extra to dwell paycheck to paycheck
Shortly rising prices for meals, transportation and different areas of family budgets could put additional stress on households’ skill to get monetary savings, Smrecek mentioned.
The Shopper Worth Index was up 8.6% in Could from a 12 months 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.