Living Paycheck to Paycheck Is Common, Even Among Those Who Make More Than $100,000
3 min
Many Americans are living in financial distress, at least some of the time.
That’s the message of a recent Harris Poll, and it’s bad news for economic growth.
About 65% of working Americans say they frequently live paycheck to paycheck, according to a recent survey of 2,105 U.S. adults conducted by The Harris Poll, asking questions supplied by Barron’s. About 30% of households report that they run out of money at the end of every month, while 35% say they don’t have money left at the end of most months.
While the number of people living on the edge financially has an immediate effect on household well-being, there are also longer term economic costs, including higher debt levels and uneven retirement readiness. Those trends could also dampen overall economic growth.
Unsurprisingly, people earning less tend to struggle more, but even those considered well off are vulnerable to paycheck shocks. About 78% of Americans earning less than $50,000 a year report they live paycheck to paycheck, according to the survey. Yet 51% of Americans who make more than $100,000 a year say they still run out of money.
Living paycheck to paycheck is a fairly “ubiquitous” circumstance, says Fiona Greig, Vanguard’s global head of investor research and policy. That’s because U.S. adults generally tend to need a bigger cash buffer than they anticipate. Additionally, she says, many consumers are facing higher living expenses as inflation erodes their purchasing power.
The latest Harris survey data show a higher percentage of Americans living paycheck to paycheck than the roughly 60% reported in August in the Reality Check: Paycheck-To-Paycheck research series. The difference likely is due to differences in the survey population, and rising energy costs that hit consumers’ budgets in recent weeks. At the end of September, gasoline averaged $3.83 a gallon nationally, two cents more than in August, and seven cents more than a year earlier, according to AAA.
Data from the Reality Check series have oscillated since the Covid pandemic started. About 66% of those surveyed in March 2020 said they were spending down their paychecks. Some 52% of Americans were in such straits in April 2021, shortly after the most generous round of federal stimulus checks went out. The latest share, at 60%, is little-changed from the prior year.
Although generous government stimulus programs boosted consumers’ savings during the Covid pandemic, those outlays have waned. The Federal Bank of San Francisco estimated that Americans accumulated $2.1 trillion in total excess savings during the pandemic. Only about $190 billion remained on consumer balance sheets as of June, the bank estimated.Researchers anticipate the data will show that excess savings were gone completely as of the end of September.
Overall inflation also has taken a toll, leaving Americans with less purchasing power. Although headline inflation, as measured by the Consumer Price Index, has fallen from a high of 9% recorded in June 2022, prices climbed at a 3.7% annual pace in September, well above the Federal Reserve’s desired 2% target.
Even as Americans draw down their savings, they aren’t refilling their coffers. The U.S. personal savings rate—the percentage of disposable personal income to total income—was 3.9% in August, according to the Bureau of Economic Analysis. While that is 0.7 percentage points higher than a year ago during a higher-inflation period, the current rate is well below prepandemic averages.
Diminished savings suggest Americans are relying on more credit now than during the pandemic, and data bear that out. Total U.S. credit-card debt hit a record of $1.03 trillion during the second quarter, according to the Federal Reserve Bank of New York.
A slower rate of savings and a higher level of borrowing have longer term consequences for many Americans. Vanguard’s research indicates that even with the influx of cash during the pandemic, the vast majority of Americans aren’t on track to meet their spending needs in retirement, and that’s after including Social Security income and private savings. The problem is particularly acute for lower-income families.
Social Security benefits replace about 62% of the retirement income that families earning roughly $22,000 a year need once they no longer are working, Vanguard reported. Yet even higher-income Americans rely on Social Security. Families earning about $173,000 a year draw about 18% of their retirement income from Social Security, according to Vanguard.
Social Security is inflation-protected, but cost-of-living adjustments affect the amount of benefits paid, and as a result, impact the program’s projected long-term solvency. Social Security benefits are set to rise 3.2% for 2024, increasing the average monthly payment of $1,790 by $57.
The high percentage of financially vulnerable Americans, whether working or retired, poses broader problems. Consumer spending accounts for about 70% of the U.S. economy. If Americans pull back on their household spending because they need to pay interest on their credit cards or loans, or because they don’t have enough saved to live in retirement, that could impact the nation’s growth.
So far, most Americans have kept up with their debt payments while continuing to spend. Overall delinquencies were largely in check as of the second quarter.
The robust labour market has helped: The U.S. economy added 336,000 jobs in September, well above expectations. Even so, the imbalance between labour demand and supply continues to narrow, Fed Vice Chair Philip Jefferson said in a speech last Monday.
“We’re at kind of a turning point in our economy,” Greig says, noting that this could be an inflection point for consumers.
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The lunar flyby would be the deepest humans have traveled in space in decades.
4 min
It’s go time for the highest-stakes mission at NASA in more than 50 years.
On April 1, the agency is set to launch four astronauts around the moon, the deepest human spaceflight since the final Apollo lunar landing in 1972.
The launch window for Artemis II , as the mission is called, opens at 6:24 p.m. ET.
National Aeronautics and Space Administration teams have been preparing the vehicles to depart from Florida’s Kennedy Space Center on the planned roughly 10-day trip. Crew members have trained for years for this moment.
Reid Wiseman, the NASA astronaut serving as mission commander, said he doesn’t fear taking the voyage. A widower, he does worry at times about what he is putting his daughters through.
“I could have a very comfortable life for them,” Wiseman said in an interview last September.
“But I’m also a human, and I see the spirit in their eyes that is burning in my soul too. And so we’ve just got to never stop going.”
Wiseman’s crewmates on Artemis II are NASA’s Victor Glover and Christina Koch, as well as Canadian Space Agency astronaut Jeremy Hansen.
What are the goals for Artemis II?
The biggest one: Safely fly the crew on vehicles that have never carried astronauts before.
The towering Space Launch System rocket has the job of lofting a vehicle called Orion into space and on its way to the moon.
Orion is designed to carry the crew around the moon and back. Myriad systems on the ship—life support, communications, navigation—will be tested with the astronauts on board.
SLS and Orion don’t have much flight experience. The vehicles last flew in 2022, when the agency completed its uncrewed Artemis I mission .
How is the mission expected to unfold?
Artemis II will begin when SLS takes off from a launchpad in Florida with Orion stacked on top of it.
The so-called upper stage of SLS will later separate from the main part of the rocket with Orion attached, and use its engine to set up the latter vehicle for a push to the moon.
After Orion separates from the upper stage, it will conduct what is called a translunar injection—the engine firing that commits Orion to soaring out to the moon. It will fly to the moon over the course of a few days and travel around its far side.
Orion will face a tough return home after speeding through space. As it hits Earth’s atmosphere, Orion will be flying at 25,000 miles an hour and face temperatures of 5,000 degrees as it slows down. The capsule is designed to land under parachutes in the Pacific Ocean, not far from San Diego.
Is it possible Artemis II will be delayed?
Yes.
For safety reasons, the agency won’t launch if certain tough weather conditions roll through the Cape Canaveral, Fla., area. Delays caused by technical problems are possible, too. NASA has other dates identified for the mission if it doesn’t begin April 1.
Who are the astronauts flying on Artemis II?
The crew will be led by Wiseman, a retired Navy pilot who completed military deployments before joining NASA’s astronaut corps. He traveled to the International Space Station in 2014.
Two other astronauts will represent NASA during the mission: Glover, an experienced Navy pilot, and Koch, who began her career as an electrical engineer for the agency and once spent a year at a research station in the South Pole. Both have traveled to the space station before.
Hansen is a military pilot who joined Canada’s astronaut corps in 2009. He will be making his first trip to space.
Koch’s participation in Artemis II will mark the first time a woman has flown beyond orbits near Earth. Glover and Hansen will be the first African-American and non-American astronauts, respectively, to do the same.
What will the astronauts do during the flight?
The astronauts will evaluate how Orion flies, practice emergency procedures and capture images of the far side of the moon for scientific and exploration purposes (they may become the first humans to see parts of the far side of the lunar surface). Health-tracking projects of the astronauts are designed to inform future missions.
Those efforts will play out in Orion’s crew module, which has about two minivans worth of living area.
On board, the astronauts will spend about 30 minutes a day exercising, using a device that allows them to do dead lifts, rowing and more. Sleep will come in eight-hour stretches in hammocks.
There is a custom-made warmer for meals, with beef brisket and veggie quiche on the menu.
Each astronaut is permitted two flavored beverages a day, including coffee. The crew will hold one hourlong shared meal each day.
The Universal Waste Management System—that’s the toilet—uses air flow to pull fluid and solid waste away into containers.
What happens after Artemis II?
Assuming it goes well, NASA will march on to Artemis III, scheduled for next year. During that operation, NASA plans to launch Orion with crew members on board and have the ship practice docking with lunar-lander vehicles that Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have been developing. The rendezvous operations will occur relatively close to Earth.
NASA hopes that its contractors and the agency itself are ready to attempt one or more lunar landing missions in 2028. Many current and former spaceflight officials are skeptical that timeline is feasible.
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