24/7 Wall St. Insights

• A recent analysis reveals that many Americans would describe themselves as living paycheck to paycheck.
• The results are similar despite age and income.
• Also: Dividend legends to hold forever.

A new Bank of America study titled “Paycheck to paycheck: what, who, where, why?” found that 20% of people who make over $150,000 would describe themselves this way. The authors admit that not everyone defines “paycheck to paycheck” similarly.

The study presumes that people who identify as “paycheck to paycheck” spend all they earn yearly. BofA defines this as people who spend 95% of their income. It also reports that these people have nothing left for savings after exhausting their incomes.

The study reports that a quarter of those polled described themselves as living paycheck to paycheck and that most of these are lower-income people. “Naturally, lower-income households are more likely to struggle financially, but even some higher-income households appear to be spending nearly all they earn.”

The percentage of people who believe they live paycheck to paycheck does not vary much based on income. The rate for people earning $51,000 to $75,000 is less than 25%, compared to 20% for those making over $150,000. Additionally, the figure does not change much with age. The figure is highest among baby boomers, who may live on fixed incomes.

Finally, many people believe they live paycheck to paycheck due to household expenses, which the study’s authors say could improve if inflation falls.

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