52% of Americans Struggle to Make Ends Meet
Over half of Americans face financial hardship as income fails to keep pace with rising costs of living.
More than half of Americans are struggling to make ends meet, according to a new report from the FINRA Investor Education Foundation. This alarming statistic reflects a broader financial crisis affecting millions of households across the nation. As wages stagnate and living costs continue to rise, Americans find themselves in an increasingly precarious financial situation, unable to cover basic necessities or save for the future.
The Growing Financial Crisis
The financial struggles facing Americans have reached critical levels. An estimated 24% of US households are living paycheck to paycheck so far in 2025, according to a Bank of America Institute analysis. However, when looking at broader measures, the situation appears even more dire—with 58% of Americans reporting they live paycheck to paycheck. This discrepancy highlights the varying degrees of financial strain different populations experience.
Bank of America researchers analyzed internal data on tens of millions of consumers and tracked how much income customers spent on necessities including housing, gasoline, groceries, child care, and utilities. They found that 24% of households spend over 95% of their income on these necessities, leaving little to nothing left over for “nice-to-have” items like dining out or vacations, let alone saving for emergencies.
The Wage Gap and Income Inequality
One of the most pressing issues contributing to financial hardship is the growing wage gap between different income levels. After-tax wages increased just about 2% in October year-over-year among middle-income consumers, according to Bank of America findings. This increase falls below the 3% inflation rate recorded as of September, meaning middle-income families are losing purchasing power.
The situation for lower-income Americans is significantly worse. Their after-tax wages increased just 1% year-over-year, while by contrast, high-income wages jumped 4%, safely outpacing the increase in the cost of living. This wage growth gap between high- and low-income Americans hasn’t been this high since 2016, according to Bank of America economists.
For Millennials, the wage gap is even more pronounced. Wages for low-income Millennials have inched up just 1%, compared with 6% for high-income Millennials. As one 34-year-old Millennial struggling to find stable employment stated, “We work full-time and have degrees. And we’re getting nowhere”.
The Savings Crisis in America
Despite the desire to save, most Americans struggle to accumulate emergency funds. According to survey data, 42% don’t have $1,000 in emergency savings and only 37% keep a dedicated emergency fund. This lack of financial cushion leaves families vulnerable to unexpected expenses.
The situation is even more alarming when examining actual savings balances. About one-third of those with savings accounts have less than $500 saved, while 5% have a negative balance in their savings account. Additionally, 45% of people have completely drained their savings at some point, and 11% have drained it multiple times.
When it comes to retirement preparedness, Americans are similarly unprepared. One in five acknowledge their retirement accounts lag behind their peers. In fact, only 18% of survey participants say they’ve saved enough for a comfortable retirement, down from 31% in 2020.
Why Americans Can’t Save
Multiple factors prevent Americans from building emergency savings and long-term financial security:
- Insufficient income: 42% of survey respondents cited “not enough income” as the biggest obstacle to saving
- Rising costs: 34% said “rising costs for everyday items” impedes their ability to put money back
- Lost income: 33% of Americans lost significant income in the past year
- Financial stress: 35% say “not making enough money” is their biggest source of financial stress
Interestingly, 38% of respondents indicated that “more income” would help them save more effectively, highlighting that the primary barrier to financial security is insufficient earnings relative to expenses.
The Paycheck-to-Paycheck Reality
The reality of living paycheck to paycheck extends beyond single-income households. Forty-seven percent report needing more than one income to cover bills. Here’s how Americans are making up the income difference:
- 58% get extra income from a spouse or partner
- 33% make extra money from a side hustle
- 20% get help from another household member
- 11% receive government assistance
This demonstrates that many households require multiple income streams just to maintain their current standard of living, a sign of how inadequate single incomes have become in today’s economy.
Cost of Living vs. Median Income
The fundamental issue underlying financial hardship is the massive gap between household expenses and median income. Annual household expenses can cost upwards of $85,000 per year, yet the median earnings for full-time and salary workers is only about $62,000 annually. This $23,000 annual shortfall explains why so many Americans struggle financially.
The problem is compounded by the fact that 69% of middle-income Americans say their income is falling behind the cost of living. This represents a dramatic increase from 50% just five years ago, indicating an accelerating affordability crisis.
Income Inequality by Income Level
The Bank of America Institute found that higher-income and lower-income households are essentially living in “two different worlds”. While the rate of increase in households living paycheck to paycheck has slowed significantly, the share of lower-income households living paycheck to paycheck jumped from 27% in 2023 to 29%.
This growing disparity reveals how the economic challenges are not uniformly distributed across income levels. Lower-income households face mounting pressure as prices rise faster than their wages, while higher-income households maintain relative financial stability with wage growth outpacing inflation.
The Broader Economic Impact
Gregory Daco, chief economist at EY-Parthenon, notes that the large number of households living paycheck to paycheck underscores the “deepening affordability crisis” caused by five years of price hikes that have outpaced income gains. This crisis has real consequences for consumer spending and economic growth.
When families struggle to make ends meet and worry about their jobs, they tend to spend much more cautiously. This reduced consumer spending can negatively impact the broader economy. Additionally, households are showing signs of financial distress through changing payment behaviors—car loans, historically the last payment Americans miss, are showing rising delinquency rates.
Bank of America also found that the number of households making just the minimum payment on their credit cards is rising, though the share of credit card users paying off their entire balance each month is also increasing, suggesting a “mixed bag” of consumer health.
Personal Stories of Financial Hardship
The statistics translate into real human struggles. Austin H., a 34-year-old with a master’s degree in fine arts, has applied to roughly 1,000 jobs over the past year with no success. Despite his education, he’s living paycheck to paycheck with almost no savings. Supporting his partner, a veterinary student, while managing his own student debt has made it impossible to achieve his goals. “To be 34 and living paycheck to paycheck with no savings, things are pretty crappy right now,” he said.
Another example is Vanessa Jones, a 65-year-old grandmother who took on a second nursing job two years ago because she couldn’t make ends meet. Despite working multiple jobs, she faced astronomical medical bills after being diagnosed with cancer and ultimately filed for bankruptcy with $85,000 in medical debt. Her story illustrates how even multiple incomes and decades of work can be insufficient when facing major expenses.
Emergency Fund Usage and Financial Vulnerability
Americans are increasingly tapping emergency funds just to survive month-to-month. About half of Americans are increasingly using their rainy-day emergency funds to make ends meet, leaving them even more vulnerable to financial shocks. Additionally, one in five Americans don’t know how to handle financial setbacks or admit they don’t handle them well at all.
This reliance on emergency funds for basic living expenses represents a critical vulnerability. Without these reserves, even a minor emergency—a car repair, medical expense, or temporary job loss—can push families into debt or financial crisis.
The Role of Inflation and Price Increases
The cumulative effect of inflation has been devastating for household finances. Prices at the grocery store, daycare, housing, and healthcare have all increased significantly, putting pressure on families even when they have stable employment and retirement plans for the future. The fact that these price increases have substantially outpaced wage growth means real purchasing power has declined for most Americans.
Frequently Asked Questions (FAQs)
Q: What percentage of Americans are living paycheck to paycheck?
A: Estimates vary by measurement method. An estimated 24% of US households spend over 95% of their income on necessities, while 58% of Americans report living paycheck to paycheck more broadly.
Q: Why can’t Americans save money?
A: The primary reasons are insufficient income (42%), rising costs for everyday items (34%), and lost income (33%). Most Americans simply don’t earn enough relative to their expenses to build meaningful savings.
Q: How much should I have in emergency savings?
A: Financial experts typically recommend 3-6 months of living expenses, but only 37% of Americans maintain a dedicated emergency fund, and 42% don’t have $1,000 saved.
Q: What is the wage gap between high and low-income Americans?
A: After-tax wages for low-income Americans increased just 1% year-over-year, while high-income wages jumped 4%. This gap is the highest since 2016.
Q: How do households make up income shortfalls?
A: 47% of households need more than one income to cover bills. They supplement income through spouse/partner earnings (58%), side hustles (33%), household help (20%), or government assistance (11%).
Q: What is the gap between median household expenses and income?
A: Annual household expenses average around $85,000, while median earnings for full-time workers are approximately $62,000—a $23,000 annual shortfall.
References
- “‘Things are pretty crappy.’ 1 in 4 US households are living paycheck to paycheck” — CNN Business/Bank of America Institute. 2025-11-13. https://ktvz.com/money/cnn-business-consumer/2025/11/13/things-are-pretty-crappy-1-in-4-us-households-are-living-paycheck-to-paycheck/
- “The State of Savings in America” — The Penny Hoarder. 2025. https://www.thepennyhoarder.com/save-money/state-of-savings/
- “52% of Americans Struggle to Make Ends Meet” — The Penny Hoarder/FINRA Investor Education Foundation. 2025. https://www.thepennyhoarder.com/save-money/americans-struggle-to-make-ends-meet/
- “New survey finds most Americans struggling to make ends meet” — CBS Boston/Primerica Survey. 2025-10-16. https://www.youtube.com/watch?v=Ja9KhDTUAFA
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