MW A shocking percentage of people earning more than $300,000 live paycheck to paycheck. Why these wealthy people burn through cash.
By Venessa Wong
When it comes to money, sometimes less is more
Above a certain level, more income actually increased the likelihood of people feeling financially stretched.
Making more money can solve a lot of financial problems - if you manage it wisely, that is.
Results from a Goldman Sachs $(GS)$ survey found that households earning more than $300,000, who are in roughly the top 5% of earners, reported higher rates of living paycheck to paycheck than many who earned less.
The share of households earning $50,000 to $100,000 - a group that includes the median household earning $84,000 - who said they were living paycheck to paycheck was 36%.
Yet the rate was an even higher 41% of those earning $300,000 to $500,000. For those earning more than $500,000, the rate was 40%, according to the Goldman Sachs poll.
In other words, above a certain level, more income actually increased the likelihood of respondents feeling financially stretched. The survey defined living paycheck to paycheck as finding "it tough to make progress on any long-term financial goals."
The group with the lowest rate (16%) of living paycheck to paycheck was households earning $200,000 to $300,000. They make up roughly the 90th to 95th percentile of households by income. This group was also the most likely to say they were "able to make progress on both short-term and long-term financial goals."
The findings in Goldman Sachs's research challenge Gen Z-ers' widely held belief that it takes an annual income of more than $500,000 to be "financially successful," as MarketWatch previously reported. These households are, in fact, less likely to feel they are making progress on both short-term and long-term financial goals than those who earn less.
The results also add nuance to the fact that the top 10% of American households by income, who earn at least $250,000, are behind half of all consumer spending. They suggest that many members of this group feel their consumption habits make it difficult to satisfy their own financial ambitions.
Read more: Generation Z thinks it needs $500,000 a year to succeed. What that says about our economy.
To be sure, people who earn much lower than average incomes are more likely to report having trouble getting by on their incomes. Households earning less than $50,000, who are roughly the lowest 30% of earners, reported the highest rate of paycheck-to-paycheck living, at 57%.
Respondents in the $200,000 to $300,000 income bracket aren't "necessarily 'optimal' spenders relative to other groups," said Chris Ceder, a senior retirement strategist at Goldman Sachs Asset Management.
But they likely have "savings and spending goals [that] are generally more easily covered" than those with higher earnings, who set intense financial goals and often "'step up' into significantly higher saving and spending requirements, oriented toward both lifestyle and long-term financial security," Ceder said.
For example, households making more than $300,000 often "shift toward a higher-cost standard of living - such as moving from public to private education or accessing lifestyle memberships that function as fixed discretionary expenses," he noted.
Some financial planners dub this phenomenon "lifestyle creep" - the idea that when people start to make more money, they take on more expenses, including ones they would have considered splurges when they made less money. It's something that planners warn their clients to guard against as they move up the income ladder.
People with higher incomes also have more flexibility to work toward major financial goals, like paying for their children's college education. Saving for college, for example, is a "primary financial objective for higher earners," Ceder said, while it's less of a priority for lower-income earners. Research from the Brookings Institution found that people from lower-income households are less likely to go to college than those from higher-income households, in part because of the cost. So "while lower earners may not be saving for education at all, higher earners are much more likely to have significant college saving goals," said Ceder.
Households earning more than $300,000 also may feel the pressure to save at "intensified" rates for retirement, he added, because their future Social Security payments will amount to only a small portion of their earnings while working.
In reality, despite their sense of falling behind, most high earners save a lot. The top 1% of earners own 24.6% of wealth in the U.S.
Related: Here's what it means to be rich in this economy - from your 20s to your 80s
Once your income reaches a certain point, it's so easy to think, "'I'm going to go out to that nicer dinner; I'm going to splurge for first class on a plane; I'm going to "fill in the blank" because I have this discretionary income.' And you have this mindset of, 'Why shouldn't I?'" Erin Moriarity, host of the personal finance YouTube channel Erin Talks Money, told MarketWatch.
Some of those luxuries then become fixed expenses that are hard to unwind - a bigger house, a more expensive car, private school. "All of a sudden, your burn [rate] is just getting higher and higher" and starts to get in the way of saving enough to retire, said Moriarity, who also discussed the study in a video.
People earning $100,000 to $300,000, on the other hand, still earn more than average, but they may not have access to the highest-tier housing markets or may not regularly have the opportunity for "social-status spending" - for instance, at country clubs - that would stress their budgets, she noted.
Even for the wealthy, "if you really want to have this lavish lifestyle, write out what you think it would cost - actually put a number to it - because honestly, for most people, it's less expensive than they might think," Moriarity said. For instance, if you think buying a really expensive car might make you happy, "Why don't you rent it and drive it around for a week? You might find by the end of the week, it didn't really do anything for you."
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-Venessa Wong
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(END) Dow Jones Newswires
March 07, 2026 14:37 ET (19:37 GMT)
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