4 in 10 employees incomes greater than $500,000 a 12 months live paycheck to paycheck—and ‘lifestyle inflation’ is conserving them broke

About 41% of American employees incomes between $300,001 and $500,000—and 40% of these making over $500,000—say they’re residing paycheck to paycheck, in accordance to a new report from Goldman Sachs. 

Perhaps surprisingly, these reeling in smaller salaries are faring a bit higher: solely round 16% of these incomes $200,001 and $300,000 are struggling to make ends meet. 

And these on the underside finish of the spectrum are struggling greater than center earners, however nonetheless lower than high earners: comparatively, 25% of workers making $100,001 to $200,000 and 36% bringing in $50,001 to $100,000 live paycheck to paycheck. 

Meanwhile, about 57% of U.S. employees incomes lower than $50,000 report they’re barely getting by on their salaries. 

‘Lifestyle creep’ and why $500,000 earners are struggling

At face worth, it is not sensible why top-earners are in the identical sticky monetary state of affairs as their lower-income friends—however the research finds this paradox highlights the “impact of lifestyle creep, the phenomenon of luxuries becoming necessities to certain income cohorts.” Six-figure employees reeling in half a million-dollar salaries are struggling to maintain up with the joneses. 

“Financial strain is not confined to low-income workers,” the research reveals. “A meaningful share of higher earners also report living paycheck to paycheck or making only limited progress toward long-term financial goals, underscoring that elevated expenses, debt burdens, and lifestyle inflation can erode savings capacity across the income spectrum.”

It’s no secret that costs have been going up. The price of probably the most primary requirements, like a carton of a dozen massive eggs, currently sits at $3.60—hitting a excessive of $6.22 this March—in comparison with $1.40 earlier than the pandemic. 

And relating to even larger life purchases, like shopping for a house, prices are hovering. The median price of buying a house within the U.S. was $413,500 in August, and within the pre-pandemic period of January 2020, it was simply $328,900. These hovering bills have created a brand new cohort of ultra-rich “forever renters”—with the variety of U.S. millionaires who hire tripling between 2023 and 2019, in keeping with a report from RentCafe. Now, one in 11 millionaires having fun with seven-figure fortunes are selecting to hire over shopping for houses at unsustainable costs. 

However, these skyrocketing residing prices don’t imply that high earners are prepared to chop again on all their luxuries. They’re nonetheless driving costly vehicles, renting out large residences, and splurging on designer garments to maintain up appearances. It’s a country-wide phenomenon; about 40% of Americans have overspent to impress another person. The subject has been dubbed “lifestyle creep.”

What America’s high earners are holding again on shopping for 

While many American top-earners are nonetheless balling out on Lamborghinis, popping bottles of Dom Pérignon, and swiping their bank cards on Louis Vuitton luggage, they could be reducing again on life necessities behind the scenes to make up for his or her lavish life. 

According to a report from Clarify Capital, six-figure earners are flying economic system, turning to low cost grocery chains to hunt for higher offers, getting thrifty with shopping for garments, and scaling again on subscriptions.

Looking past each day life bills, excessive earners are additionally delaying main life purchases. About 47% are setting again their dream holidays and journey, 31% are stalling on house renovations, 26% are delaying shopping for or leasing a brand new automotive, and 17% are pushing again shopping for a brand new home. They’re even pushing again tying the knot and strolling down the aisle, as 6% of six-figure employees are delaying getting married. 

“In today’s economy, income alone doesn’t guarantee financial peace of mind,” the Clarify Capital report stated. “High earners are feeling squeezed by inflation, stressed by social pressure, and more mindful about what it really means to be well-off.”