Thanks to Inflation, 64% of Americans Now Live Paycheck to Paycheck

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The first rule of personal finance is that you should always set aside part of your paycheck for retirement savings and an emergency fund. But that’s not possible if you’re living paycheck to paycheck just to pay the bills — and a growing number of Americans are doing just that because of inflation, according to a new survey from LendingClub.

See: How Much Is Inflation Actually Costing the Average Family Each Month?
Find: Social Security COLA No Match for Inflation — These Retirement Savings Options Could Help

The survey of 2,633 U.S. consumers, conducted in partnership with and released last week, found that 64% of Americans were living paycheck to paycheck as of January 2022. That was up from 52% in April 2021 and slightly higher than the previous month.

Nearly half of respondents (48%) with annual incomes over $100,000 were living paycheck to paycheck in January — a rise of 9 percentage points from June 2021 and up from 42% in December 2021.

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Two-thirds of middle-income earners — those who make between $50,000 and $100,000 a year — said they were living paycheck to paycheck in January. That was about the same percentage as in December but was up from 53% in May 2021.

Paycheck-to-paycheck consumers fall into two basic categories: those who are struggling to pay their bills, and those who are not, perhaps because they can tap into savings. The share of those not struggling to pay their bills has seen the largest increase since October 2021, especially among higher-income consumers.

It’s not hard to understand why so many Americans are living paycheck to paycheck. It basically boils down to this: Wage hikes cannot keep up with inflation that has been running at 7% and higher — the fastest pace in four decades.

As previously reported by GOBankingRates, real average hourly earnings when adjusted for inflation decreased 2.4% from Dec. 2020 to Dec. 2021, according to the Bureau of Labor Statistics.

The result is that a bigger slice of Americans’ paychecks are going toward basic living expenses, leaving little or nothing left over for savings.

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“We are all seeing the cost of everything shooting up,” Anuj Nayar, LendingClub’s financial health officer, told CBNC. “You’ve got to eat, you’ve got to commute. These are not discretionary expenses.”

That’s true even if you earn a six-figure salary, which essentially puts you in the middle class if you live in high-dollar cities like San Francisco and New York.

Depending on where you live, $100,000 may not get you that far,” Nayar said.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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