Those who make $250,000 or more make up just 5% of Americans, according to the Census Bureau.
But, according to a new survey by Pymnts.com and LendingClub, 36% of them — while earning four times the median US salary — are living paycheck-to-paycheck. Someone should tell them there’s nothing wrong with having a Dollar Tree vase in a $1.7 million home.
Blame Millenials For Real This Time
Living paycheck-to-paycheck, of course, doesn’t necessarily mean wealthy earners are struggling or deserve a pity party. Only one in ten said they struggled to pay their household expenses in April, and of course there’s always another fat paycheck on the way.
The surprising statistic may well be blamed on a disproportionate number of free-spenders in a generation often stereotyped for free-spending: Millennials. Turns out, even the highest-earning members of the age group struggle to stuff their savings accounts, with roughly 55% of millennials earning over $250,000 saying they have little money left at the end of the month. Unsurprisingly, for all generations, the biggest culprit of high spending is likely housing expenses, which often account for a bigger slice of wealthier budgets and exploded during the pandemic:
- According to Bloomberg, a mortgage on a top-tier $1.7 million home with a 20% down payment — a realistic target price for high-earners — would cost $100,000 per year. That’s 40% of a $250,000 pretax income.
- The rich do have the advantage of being better positioned to borrow and pay off credit — consumer debt levels for March 2022 rose by $52.4 billion, a 14% annual increase, seasonally adjusted.
A Tinge of Optimism: In the Fed’s most recent annual survey of household well-being, 78% of Americans reported they were doing okay or comfortably in their finances, the most since the survey began in 2013. But 11% said they had no way of covering a $400 emergency expense. Still, among all income groups, 61% of people said they lived paycheck-to-paycheck in April, up 9% from a year earlier. No wonder Klarna has grown so popular.