Nearly 1 in 4 American households living paycheck to paycheck, report reveals

Core Insights - Nearly 24% of U.S. households are living paycheck to paycheck in 2025, marking a 0.3 percentage point increase from 2024, although the growth rate has slowed significantly compared to the previous year [1][3][4] Group 1: Definition and Impact - Living paycheck to paycheck is defined as households spending over 95% of their income on necessities, leaving little for savings or discretionary purchases [2] - The financial stress is primarily concentrated in lower-income households, with 29% of these households living paycheck to paycheck, up from 28.6% in 2024 and 27.1% in 2023 [4][5] Group 2: Economic Factors - Inflation has outpaced after-tax wage growth for middle- and lower-income households since January 2025, contributing to the increasing financial strain [3][5] - In October, wages increased by 1%, while the cost of living rose by 3%, highlighting the widening gap between income and expenses for lower-income families [6] Group 3: Higher-Income Households - About 19% of higher-income households are also living paycheck to paycheck, attributed to lifestyle changes leading to increased expenses [6]