Making six figures and living paycheck to paycheck may seem like mutually exclusive concepts but for millennials, it’s become a scary reality.
A new survey by PYMNTS and LendingClub found that 60 percent of millennials making at least $100,000 annually are living paycheck to paycheck. This is a higher rate of living paycheck to paycheck than the overall population of people making six figures, as only 40 percent of high earners said they are living on a paycheck and a prayer.
Why are so many of these high-earning millennials struggling to make ends meet despite seemingly making more than enough to get by?
There are a few reasons. First of all, $100,000 just ain’t what it used to be. While earning six-figures still sounds like an automatic ticket to wealth, the reality is not that simple.
The numbers show that income has not kept up with the cost of living, as housing and other expenses have risen at a much higher rate than salaries. For this reason, $100,000 is no longer considered upper-class wealth; it’s firmly in the middle class.
There’s also the reality that lifestyle choices come into play, as a certain amount of millennials are putting their earnings towards a comfortable lifestyle in the present as opposed to saving for the future. And living outside of their somewhat lucrative means makes living paycheck to paycheck a continued reality.
The single biggest reason that millennials making $100,000 are struggling more than older generations is the increasing generational wealth gap. In comparison to older generations, millennials, even those making six figures, have amassed less wealth and there is one major factor that causes the disparity: debt. Millennials are drowning in debt at an unprecedented rate due to student loans, credit cards, and medical expenses. It’s to the extent that even millennials who are making six figures still feel stretched thin.