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Goldman Sachs Study Finds Paycheck-to-Paycheck Strain Peaks at Both Ends of Income Scale
ReGoldman Sachs Study Finds Paycheck-to-Paycheck Strain Peaks at Both Ends of Income Scale
New research from Goldman Sachs shows that Americans earning under $50,000 or over $500,000 are the most likely to live paycheck to paycheck, with distinct pressures driving financial strain at each end of the income spectrum.
Americans at opposite ends of the income spectrum are the most likely to find themselves living paycheck to paycheck, according to new research from Goldman Sachs. The bank's «New Economics of Retirement» study found that a little over 60% of respondents earning less than $50,000 a year were living from one pay slip to the next, while approximately 38% of those earning $500,000 or more reported the same.
The findings point to a K-shaped divide in financial strain, with distinct pressures weighing on each group. Lower-income individuals were primarily stretched by inflation on everyday goods and housing, the bank said. Higher earners, by contrast, were dealing with issues such as caregiving and housing for family members.
«Higher-income individuals may be the financial anchors for their extended families,» a Goldman Sachs spokesman said. «The data suggests that the 'sandwich generation' squeeze can be a key factor redirecting financial resources from long-term financial goals.»
The study surveyed 5,106 respondents and examined a range of personal finance metrics beyond paycheck-to-paycheck living. Respondents earning more than $500,000 were the most likely cohort to report having delayed financial goals, at 80%, followed closely by those earning less than $50,000 at approximately 79%. Both groups were also the most likely to pay the minimum or less on their credit cards, at roughly 45% of respondents in each cohort.
Retirement savings obstacles differed by income level. Among those earning above $500,000, 28% cited family caregiving or support as among the greatest barriers to their own retirement savings plans, while nearly 27% in the top income cohort said medical expenses were having a major impact on savings. For those earning less than $50,000, debt payments and housing were each cited by 36.8% of respondents as obstacles, though the greatest barrier was day-to-day living expenses, with 42.5% saying it prevented them from saving as they would like to.
Lifestyle creep is another factor for high earners, according to Goldman Sachs. The notion that increasingly luxurious household and discretionary spending quickly becomes perceived as a necessity as income grows can make it difficult to adjust budgets, particularly across a family that depends on key financial anchors.
Jonathan Barber, head of compensation and benefits solutions at Goldman Sachs Ayco, said on a media roundtable ahead of the survey's release that the reason high earners may not contribute to retirement plans is not indifference. «It's certain expenses are always going to come first … it's living expenses, housing costs, things like that,» he said.
Barber added that the bank regularly discusses with corporate partners what tools and benefits companies can offer to help employees establish a financial foundation. «What are some of those benefits that can help establish that initial foundation that gives the employee the confidence to contribute to the retirement plan? How do we help with those initial issues like debt, cash flow, and how do we put in some type of personalization into these benefits?» he said. «And certainly we'll talk about financial counseling. That's a big part of this.»
The findings underscore that financial strain is not confined to lower-income households, and that retirement savings challenges can persist across the income spectrum for different reasons. For lower earners, immediate costs such as food, rent and debt payments crowd out long-term saving. For higher earners, family obligations and lifestyle expectations can redirect resources away from retirement goals, even as their incomes rise.
Goldman Sachs said the data suggests that the squeeze on the «sandwich generation» — those supporting both aging parents and children — can be a key factor. The bank noted that if rising costs require lifestyle adjustments to maintain a more consistent budget, it might be difficult to implement across a family that depends on key financial anchors.
The study's results arrive amid ongoing national conversations about inflation, household debt and retirement readiness. While the paycheck-to-paycheck rate was highest among those earning less than $50,000, the fact that more than a third of those earning $500,000 or more reported the same suggests that income alone does not guarantee financial security.
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