They Thought They Were Safe – Bank of America Drops the Bombshell on Paycheck to Paycheck Living!

The number of U.S. households living paycheck to paycheck has significantly increased over the past five years, affecting all income brackets, according to a recent report by the Bank of America Institute. The findings highlight a growing financial struggle across the nation, with many families barely managing to cover essential living costs.

Released on Tuesday, the report reveals that 26% of Americans are now spending more than 95% of their take-home pay on critical expenses. These include necessities such as food, housing, utilities, gas, insurance, and child care. The study also found that nearly 30% of households are using 90% or more of their income on these vital needs, leaving little room for savings or unexpected expenses.

In comparison to 2019, the number of people living paycheck to paycheck has grown by 10%. This means that in 2024, many more families are feeling the financial pinch, struggling to stay afloat as costs continue to rise.

The impact of inflation has been significant, although it’s difficult to pinpoint just how much of a role it plays. However, it’s clear that the rising cost of basic goods, such as groceries, is one of the main reasons behind the financial stress many are experiencing.

David Tinsley, a senior economist at the Bank of America Institute and the study’s lead author, explained, “For some households, the rises in their incomes will have largely kept up with inflation, shielding them. But, for some people already living close to paycheck-to-paycheck, this may be less the case, meaning more get caught in the net.”

Lower-income households, in particular, have been hit the hardest. According to the study, 35% of those earning less than $50,000 a year find themselves in this situation. But the trend isn’t limited to low earners. Even those with higher incomes are feeling the squeeze, with at least 20% of households earning more than $150,000 also reporting that they have little left after paying for essential expenses.

The increase in households living paycheck to paycheck isn’t limited to income brackets; it also spans generations. The report found that from Gen Z to Baby Boomers, more people are feeling the financial strain. However, there was a slight decrease among those born before 1946.

“Rising prices have impacted all incomes and generations, so it’s not surprising we see some rise in the share of people living paycheck to paycheck across these cohorts too,” Tinsley said. “Housing costs are an important component and older generations and those on higher incomes often have bigger mortgages, which means that some can live paycheck to paycheck even on higher wages.”

The report sheds light on a troubling trend in the U.S. economy, where many households, regardless of income level, are struggling to get by. Rising costs, particularly in housing and basic goods, continue to place a heavy burden on families, leaving many with little financial flexibility.

As inflation continues to affect essential living costs, it’s clear that even higher-income earners are not immune to the pressures of living paycheck to paycheck. This growing issue across generations and income brackets calls for attention to the broader economic challenges faced by millions of Americans today.