Goldman Sachs: 40% of $400-500K and $500K+ households “live paycheck to paycheck”

[Anonymous]

Anonymous wrote:I assume at that income level they mean they aren't very liquid and therefore rely on each paycheck to pay their bills. They just don't want to sell off property or stock/bonds, but they could if they lost their income, so it's not really paycheck to paycheck like it would be for low-income families.

This describes me perfectly. I live paycheck to paycheck on a true MC income (think social work, associate professor, nurse). If I ever got into a bind - massive medical bill? fire? — I could sell off non-retirement assets and easily afford the problem.

But I’m not going to do that just to afford groceries or meals out or travel So I feel pinched almost all the time.

[Anonymous]

The curious thing if you look at the graph of responses:

Most people earning $200-$300K did NOT state they were living paycheck to paycheck. The majority 56% said they were doing considerably better than that, and felt they were able to make significant progress on short and long term financial goals.

Yet as people moved up the income scale, that percentage dropped a lot! Only about 25% of pe3ople earning $300K+ felt that they were making significant progress on short and long term goals.

I'm wondering about the age of the respondents and whether theyhad kids?

$200,000 income (one parent) + 2 little kids with a Stay at Home Parent is probably doing better than $300,000 HHI where both parents earn $150,000 and you have to pay for daycare for 2 kids.

[Anonymous]

Anonymous wrote:We make about $450k. We max out most deductions, have a $4,800 mortgage payment, no daycare or debt and we pay cash for cars and vacations, and I can not fathom paying for a nanny, dual private, country club, and cleaning. When college comes we have savings. No quarterly tax payments (we're regular employees).

Must be nice to have such a low mortgage

[Anonymous]

My gross HHI is $300k. 15% goes to retirement (pre-tax), 15% to savings, 5% to kids college savings. We have a mortgage on a home that cost $390k 15 years ago, now worth ~$750k with just a few more years until it is paid off. Our house is on the “lower end” of the price range for our neighborhood. Our cars are 5-10 years old, mid range (Chrysler Pacifica, Honda Pilot). We eat out frequently, have newer iPhones, but do not buy designer clothes. We take one large domestic vacation each summer.
Our neighbors, in homes that are worth $1.25M, have similar careers, take elaborate international vacations, have expensive cars and designer clothing… I always wonder if they are not saving any money, or if my husband and I are somehow doing something wrong since we are not risky in our investments. This article tells me they are likely not saving.

[Anonymous]

Anonymous wrote:The curious thing if you look at the graph of responses:

Most people earning $200-$300K did NOT state they were living paycheck to paycheck. The majority 56% said they were doing considerably better than that, and felt they were able to make significant progress on short and long term financial goals.

Yet as people moved up the income scale, that percentage dropped a lot! Only about 25% of pe3ople earning $300K+ felt that they were making significant progress on short and long term goals.

I'm wondering about the age of the respondents and whether theyhad kids?

$200,000 income (one parent) + 2 little kids with a Stay at Home Parent is probably doing better than $300,000 HHI where both parents earn $150,000 and you have to pay for daycare for 2 kids.

It’s lifestyle creep. We live like we make $200K so people assume we make $200K. In reality we make a ton more. Our friends making $400K live like they make what we actually make and frequently complain about how stretched they are financially and how it “keeps them up at night.” You learn a lot about people and money when you live below your means and people assume in conversation you make less than them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We make about $450k. We max out most deductions, have a $4,800 mortgage payment, no daycare or debt and we pay cash for cars and vacations, and I can not fathom paying for a nanny, dual private, country club, and cleaning. When college comes we have savings. No quarterly tax payments (we're regular employees).

Must be nice to have such a low mortgage

A high mortgage is a choice.

[Anonymous]

Anonymous wrote:The curious thing if you look at the graph of responses:

Most people earning $200-$300K did NOT state they were living paycheck to paycheck. The majority 56% said they were doing considerably better than that, and felt they were able to make significant progress on short and long term financial goals.

Yet as people moved up the income scale, that percentage dropped a lot! Only about 25% of pe3ople earning $300K+ felt that they were making significant progress on short and long term goals.

I'm wondering about the age of the respondents and whether theyhad kids?

$200,000 income (one parent) + 2 little kids with a Stay at Home Parent is probably doing better than $300,000 HHI where both parents earn $150,000 and you have to pay for daycare for 2 kids.

I wonder if it's just perception. Like if you make $200k and save $40k between retirement/college/short term savings, you're justifiably proud and feel closer to your goals (down payment, new car, college tuition). But if you make $500k and save $100k between retirement/college/investments, you don't feel like you're making much headway because your goals are extremely expensive (early retirement/financial independence) or you feel like paying cash for cars/college is not really a goal or achievement so much as an expectation at your HHI, the same way a person making $200k wouldn't feel accomplished for paying their light bill.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The curious thing if you look at the graph of responses:

Most people earning $200-$300K did NOT state they were living paycheck to paycheck. The majority 56% said they were doing considerably better than that, and felt they were able to make significant progress on short and long term financial goals.

Yet as people moved up the income scale, that percentage dropped a lot! Only about 25% of pe3ople earning $300K+ felt that they were making significant progress on short and long term goals.

I'm wondering about the age of the respondents and whether theyhad kids?

$200,000 income (one parent) + 2 little kids with a Stay at Home Parent is probably doing better than $300,000 HHI where both parents earn $150,000 and you have to pay for daycare for 2 kids.

I wonder if it's just perception. Like if you make $200k and save $40k between retirement/college/short term savings, you're justifiably proud and feel closer to your goals (down payment, new car, college tuition). But if you make $500k and save $100k between retirement/college/investments, you don't feel like you're making much headway because your goals are extremely expensive (early retirement/financial independence) or you feel like paying cash for cars/college is not really a goal or achievement so much as an expectation at your HHI, the same way a person making $200k wouldn't feel accomplished for paying their light bill.

Expectations should be challenged though if your goal is financial peace of mind. Having the theoretical ability to pay 90/year for college X 2 or 3 does not mean you should do this, because your financial picture will be entirely different if you do/do not make these types of decisions.

[Anonymous]

Anonymous wrote:A lot of people in this bracket are the ones trying to keep up with the Joneses. So they have multiple car notes, possibly two mortgages if they want a second place, etc.

I agree!!! I live in a neighborhood of people like this…

[Anonymous]

Anonymous wrote:It’s hard to know what is accurate in this area. High end shops here seem filled with buyers. Are there that many wealthy people, or are people throwing money away that they can’t afford? I assume both.

Use your critical thinking skills. Did you actually read the report? Did you read the part about liftstyle creep, luxuries becoming necessities, and lifestyle inflation? God gave you a brain, use it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I assume at that income level they mean they aren't very liquid and therefore rely on each paycheck to pay their bills. They just don't want to sell off property or stock/bonds, but they could if they lost their income, so it's not really paycheck to paycheck like it would be for low-income families.

I assume the same thing.

Did you read the article and see the graphic? I think you are ASSuming things because you cannot read.

[Anonymous]

Yea I do not understand people, this year it looks like we will hit about 800K (two incomes). Between us we will have put 47k into 401K before employer contribution and another 40K of after tax mega roth money. We then do direct deposit of 30% of our net income into our brokerage account at every pay cycle. Even after forking over ~222,000 each year to retirement and taxable investments, we still are left to blow 23,000/mo on life. The key for us is we do all of this out of payroll deductions so there is no lifestyle creep, we never see that money.. And yes, we do have a 2nd home and do drive expensive cars and do take ski trips out to the rockies. At this point our investments are like having 3rd full time wage earner in the house. Our growth last quarter was around 250K...not bad for 3 months of work! And yes at age 48 if we both lost our jobs we could get by on taking a low wage job just for the health insurance. We would not lose our home, our kids would still have college paid for and we still would live a good life.

If you make our income and are strapped and not reaching your short and long term financial goals you are a complete and total moron.

[Anonymous]

Anonymous wrote:My gross HHI is $300k. 15% goes to retirement (pre-tax), 15% to savings, 5% to kids college savings. We have a mortgage on a home that cost $390k 15 years ago, now worth ~$750k with just a few more years until it is paid off. Our house is on the “lower end” of the price range for our neighborhood. Our cars are 5-10 years old, mid range (Chrysler Pacifica, Honda Pilot). We eat out frequently, have newer iPhones, but do not buy designer clothes. We take one large domestic vacation each summer.
Our neighbors, in homes that are worth $1.25M, have similar careers, take elaborate international vacations, have expensive cars and designer clothing… I always wonder if they are not saving any money, or if my husband and I are somehow doing something wrong since we are not risky in our investments. This article tells me they are likely not saving.

It comes down to net worth more than HHI. People who get on the property ladder early and follow basic principals like investing everything past their emergency fund in the S&P 500 (ie. don’t time the market based on factors like COVID or personal politics) can easily have millions in their early 40s. Once you get the millions saved up early, interest takes over and becomes much more of a factor than HHI. Thus people can appear to be “keeping up with the Joneses” on a lower HHI but in reality have the net worth to back it up. It comes down to making smart but basic financial decisions early and throughout your life and not deviating based on fear.

[Anonymous]

Anonymous wrote:Yea I do not understand people, this year it looks like we will hit about 800K (two incomes). Between us we will have put 47k into 401K before employer contribution and another 40K of after tax mega roth money. We then do direct deposit of 30% of our net income into our brokerage account at every pay cycle. Even after forking over ~222,000 each year to retirement and taxable investments, we still are left to blow 23,000/mo on life. The key for us is we do all of this out of payroll deductions so there is no lifestyle creep, we never see that money.. And yes, we do have a 2nd home and do drive expensive cars and do take ski trips out to the rockies. At this point our investments are like having 3rd full time wage earner in the house. Our growth last quarter was around 250K...not bad for 3 months of work! And yes at age 48 if we both lost our jobs we could get by on taking a low wage job just for the health insurance. We would not lose our home, our kids would still have college paid for and we still would live a good life.

If you make our income and are strapped and not reaching your short and long term financial goals you are a complete and total moron.

Curious, what’s your net worth? We are 44/43 and very similar financials.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yea I do not understand people, this year it looks like we will hit about 800K (two incomes). Between us we will have put 47k into 401K before employer contribution and another 40K of after tax mega roth money. We then do direct deposit of 30% of our net income into our brokerage account at every pay cycle. Even after forking over ~222,000 each year to retirement and taxable investments, we still are left to blow 23,000/mo on life. The key for us is we do all of this out of payroll deductions so there is no lifestyle creep, we never see that money.. And yes, we do have a 2nd home and do drive expensive cars and do take ski trips out to the rockies. At this point our investments are like having 3rd full time wage earner in the house. Our growth last quarter was around 250K...not bad for 3 months of work! And yes at age 48 if we both lost our jobs we could get by on taking a low wage job just for the health insurance. We would not lose our home, our kids would still have college paid for and we still would live a good life.

If you make our income and are strapped and not reaching your short and long term financial goals you are a complete and total moron.

Curious, what’s your net worth? We are 44/43 and very similar financials.

to be honest i don’t really know. My spouse handles all of the finances and we just do a “state of the union” twice a year. All I know is what we contribute and that we have never pulled money out. We also have rentals that i pay exactly zero attention to which factor into NW. Probably 8M? he just makes grand announcements when we have a particularly good quarter.