More Than One-Third of Workers Earning $100k Living Paycheck to Paycheck — Are Employer-Sponsored Financial Tools the Answer?

Couple going through financial problems.
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The worst of the COVID-19 pandemic might be over in terms of the number of cases, but the financial impact lingers on as even American workers earning six-figure incomes find themselves one paycheck away from not being able to pay their bills.

More than one-third (36%) of U.S. workers earning $100,000 or more a year are living paycheck to paycheck, according to a survey conducted by consulting firm Willis Towers Watson. That’s double the percentage from 2019, before the pandemic.

More than half of workers earning less than $50,000 (52%), single parents (53%) and those in poor or fair health (57%) are also living paycheck to paycheck.

A recent LendingClub survey had similar results, with 36% of respondents who earn at least $250,000 a year saying they live paycheck to paycheck, CNBC reported.

WTW’s 2022 Global Benefits Attitudes Survey, released on June 16, polled 9,658 U.S. employees from large and midsize private employers. It found that three in 10 workers are struggling financially in some capacity, while 43% are having difficulty meeting basic needs.

More than one-fifth of respondents said they find it difficult to access or pay for housing (23%) and healthcare (22%). A similar percentage (19%) are have a hard time affording healthy food, while nearly half suffered a financial shock in the past year.

In some cases these shocks led to moves that could undermine the long-term financial security of respondents. Nearly one-quarter (23%) either took out a home equity loan or downsized their home, while 26% took out a 401(k) loan and 36% reported not being able to pay their mortgage, rent or utility bills.

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“The pandemic continues to affect the financial wellbeing of working Americans,” Mark Smrecek, WTW’s senior director, Retirement, said in a press release. “The link between financial stability and overall wellbeing has become even more precarious as employees fret over inflation, economic instability and workplace challenges.”

Struggling workers are now looking to their employers for support, Smrecek added — especially in terms of offering more financial wellbeing programs. More than one-third of survey respondents (36%) said employer-provided resources helped improve their financial situation. That’s up from 27% in 2017. Nearly half of respondents (46%) want financial apps and tools to be a core part of their employee benefit programs.

Workers whose employers don’t offer these programs and tools can still take steps to ease the financial strain. Some financial planners recommend adopting a 50-20-30 rule to bring their spending into line, CNBC reported. This means putting 50% of after-tax income toward essential expenses such as housing and food, 30% to discretionary expenses like dining out and traveling, and the remaining 20% to savings, investment and debt reduction.

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