A recent study conducted by Bank of America has revealed that a growing number of Americans are finding themselves living paycheck to paycheck, with around 25% of households spending more than 95% of their monthly income on necessities. This trend is particularly prevalent among older and lower-income Americans, who are more likely to have little to no savings left at the end of the month.
The study found that nearly half of respondents in a BofA survey described themselves as living paycheck to paycheck, with around 30% of households spending more than 90% of their income on necessary expenses. This percentage increased to 25% for households spending more than 95% of their income on necessities.
Interestingly, the report highlighted that the increase in households living paycheck to paycheck was evident across all income groups, with even some high-income earners struggling to save. Specifically, 35% of households making less than $50,000 a year were living paycheck to paycheck, while 20% of households making more than $150,000 fell into the same category.
Furthermore, the study identified that older generations, such as baby boomers, were more likely to struggle to save at the end of the month compared to younger generations like Gen Z. This points to a potential retirement crisis unfolding in the US.
The report also noted that rising inflation and housing costs have contributed to the financial challenges faced by many Americans. The median home sales price has increased by 28% over the last five years, while urban consumer prices have risen by 23%.
Overall, the study sheds light on the financial insecurity experienced by a significant portion of the American population, with a substantial number of workers living paycheck to paycheck and a considerable percentage feeling uncertain about their future financial security.