LendingClub Corporation (NYSE: LC), the parent company of LendingClub Bank, America’s leading digital marketplace bank, released key findings from the 27th edition of the Reality Check: Paycheck-To-Paycheck research series.
The Savings Deep Dive Edition “examines consumers’ ability to preserve their savings in the current economic environment, especially when faced with major expenditures.”
This edition draws on insights from a survey of 3,648 U.S. consumers “conducted from Sept. 5 to Sept. 20 and an analysis of other economic data.”
The Paycheck-to-Paycheck Landscape
Living paycheck to paycheck remains “the main financial lifestyle among U.S. consumers.”
As of September 2023, 62% of consumers “lived paycheck to paycheck, unchanged from a year prior. Seventy-nine percent of consumers earning less than $50,000 yearly live paycheck to paycheck, as well as 68% and 44% of middle- and high-income consumers, respectively.”
Moreover, over one-fifth of U.S. consumers “reported struggling to pay their bills — nearly 3 percentage points higher than this time last year.” The share of consumers living paycheck to paycheck “without issues paying monthly bills is 41%, down from 43% last year, while the share of those not living paycheck to paycheck has remained the same at 38%.”
Consumer Savings Capacity
Aggregate consumer savings “amounted to an average of $11,000 per consumer in September 2023, roughly unchanged from a year ago.”
Overall, 44% of consumers “reported diminished savings capacity relative to a year ago, with 50% of those earning less than $50,000 yearly reporting such changes.”
Conversely, at 35%, consumers “earning more than $200,000 annually are the most likely among income brackets to cite increased savings ability.” Across groups, more than one-third of consumers are optimistic “regarding increasing their savings capacity in the year to come — an indication that consumers expect to tighten their belts when they can.”
Alia Dudum, LendingClub‘s Money Expert, said:
“Inflation is taking its toll on Americans’ ability to save, and while consumers remain optimistic, they are still reporting that their monthly expenses outpace their incomes. While unemployment and wage growth are low, consumers with middle- to high-incomes are getting squeezed the most as interest rates rise, and items that were once considered routine are now a luxury.”
Average Savings Deplete Every Four Years
The research also indicates “that nearly 8 out of 10 consumers (78%) recall having at least one expenditure which required them to withdraw a significant portion of their savings.”
While it is more prevalent “with consumers who cite issues paying their bills (90%), a solid majority of consumers not living paycheck to paycheck (67%) have also done so.”
These depletions occur “on average every four years and use 67% of the average consumer’s available savings, with Gen Z emptying 70% of their savings as often as every two years.”
Among paycheck-to-paycheck consumers, these withdrawals “occur every 2.2 years and require 76% of their savings balances, on average, for those struggling to pay bills; and they occur every 2.8 years and require 73% of savings, on average, for those living paycheck to paycheck without difficulty.” Among consumers not living paycheck to paycheck, “the share of savings required is 58% and is depleted every 5.8 years, on average.”
