Living Paycheck to Paycheck on $100,000 a Year

I’ve looked at data in the past that shows millennials are behind previous generations at their age when it comes to building wealth.

Bloomberg’s Allison Schrager took the other side of this one:

Surprisingly, millennials in the 26-39 age range are actually better off than people at that age in 1989.1 The biggest difference here is they have far more student debt.

But over the long haul that’s a good thing. This debt is an investment in their future earnings power which should be higher:

So millennials not only have more financial assets, on average, than the previous generation, but the debt they’ve taken on should only help them increase those assets in the future.

The other difference Schrager pointed out is 52% of people 26-39 owned a home in 1989 versus 48% today. Maybe young people aren’t as enamored with homeownership. Or maybe they are all playing catch-up over the past year. We shall see.

However, there was a survey that came out this week that paints a slightly different picture.

PYMNTS and Lending Club asked 28,000 people if they have any money left over after spending their earnings. More than half of the respondents said they basically live paycheck-to-paycheck. And nearly 40% of people who make $100k a year or more live paycheck-to-paycheck.

These numbers were even worse for millennials, where 70% of them live paycheck-to-paycheck including 60% of those making $100k or more.

This seems absurd. How is that possible?

Well some of these people could live on the coasts where the standard of living is much higher and your money doesn’t go as far. The results could also be bunk. I’m generally anti-survey because everybody lies on these things so take these results with a grain of salt.

But it could also be a case where living paycheck-to-paycheck has different connotations to different households. This is from the survey’s researchers:

Living paycheck to paycheck sometimes carries connotations of barely scraping by and of poverty. The reality of a paycheck-to-paycheck lifestyle in the United States today is much more complex, and the current economic environment has made it even more complicated.

Many high earners increase their standard of living when their income rises. Some people either prefer a more expensive lifestyle or fall victim to lifestyle creep. For many this is a choice they make. What we consider necessities has certainly changed over time.

I would be shocked if this 60% figure didn’t include people who are already saving in a 401k or similar retirement vehicle. I do like to treat my savings like a bill payment but if that’s the case you’re not actually living paycheck-to-paycheck.

And if you are making six figures and truly living paycheck-to-paycheck, there’s never been a better time to start than now.

There are certainly people in this country that are hurting financially. But collectively, U.S. households are in better shape financially than they have ever been.

Michael and I discussed this survey and much more on this week’s Animal Spirits video:

Subscribe to The Compound for more of these videos.

Further Reading:
Life is Too Short to Save Everything

Now here’s what I’ve been reading lately:

1Check out this piece from Nick too that looks at these numbers from a number of different angles.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.