More than a third of Americans earning at least $250,000 annually report living paycheck to paycheck, highlighting the impact of inflation on budgets across the income spectrum. According to a report by industry publication Pymnts.com and LendingClub Corp., about 36% of households earning nearly four times the median US salary are dedicating almost all of their income to household expenses.
This trend is especially pronounced among millennials, now in their mid-20s to early 40s: over half of top earners in this generation say they have little left at the end of the month.
US high earners who report living paycheck to paycheck represent roughly the top 5% of earners in the country, according to US Census Bureau data. Living paycheck to paycheck doesn’t necessarily indicate hardship. LendingClub distinguishes between those who can easily pay their bills and those who cannot. Only about one in ten high earners reported difficulties covering all their household expenses in April, according to the survey.
Housing expenses, which take up significant portions of wealthier people's budgets, have surged during the pandemic. For instance, in Orange County, California, a top-tier home cost $1.7 million in April, up from $1.2 million in February 2020, based on Zillow Group Inc. data. A mortgage on such a house, assuming a 20% down payment, would cost about $100,000 per year, accounting for 40% of a $250,000 annual pre-tax income.
Top earners, even those struggling to pay bills, are still much better off than the rest of the nation, which faces soaring prices for essentials like food, gas, and electricity. Among all consumers surveyed, 61.3% reported living paycheck to paycheck in April, a 9 percentage-point increase from a year earlier, LendingClub noted in its report.
To maintain their lifestyles, higher-income households are more likely to charge expenses to credit cards but are also more likely to pay off their balances in full. US consumer borrowing surged in March by the most on record as credit-card balances increased and non-revolving credit jumped, underscoring the combined effect of strong spending and rising prices.
