Rising Costs Push More Americans to Live Paycheck to Paycheck, Goldman Sachs Warns

More than four in ten U.S. workers now rely on every paycheck to meet basic expenses, according to a new survey released by Goldman Sachs Asset Management. The report indicates that escalating housing, childcare, education, and healthcare costs are eroding the capacity of Generation Z, millennials, and Generation X to save for retirement.

Growing Financial Strain Across Generations

The study polled employees from multiple age groups and found that 75 percent of respondents cite rising essential costs as the primary obstacle to long-term savings. Roughly half of Gen X, more than three-quarters of millennials, and over 70 percent of Gen Z participants said competing financial priorities undermine their retirement plans. About 30 percent of working baby boomers reported similar challenges.

If current trends persist, Goldman Sachs projects that more than half of the U.S. workforce could be living paycheck to paycheck by 2033. Greg Wilson, head of retirement at Goldman Sachs Asset Management, stated that the traditional advice simply to “save more” is no longer realistic for many households. “These findings force us to ask a very critical question: Does the retirement math still work? The answer is no,” he said.

Impact of Major Life Events

The survey highlights how significant milestones—buying a home, getting married, or starting a family—frequently divert funds away from retirement accounts. Younger workers, who often confront high student-loan debt and rising mortgage rates, appear especially vulnerable. The report notes that once savings habits are disrupted, many individuals struggle to resume regular contributions.

For additional context on nationwide income and expenditure trends, the U.S. Bureau of Labor Statistics documents similar pressures affecting household budgets, reinforcing Goldman Sachs’ findings.

Personalized Planning Yields Better Outcomes

Nancy DeRusso, head of financial planning at Goldman Sachs Ayco, emphasized that a formal retirement strategy correlates with higher savings rates. Workers with a personalized plan show a 15 percent greater savings-to-income ratio, while retirees with such a plan report a 27 percent improvement. DeRusso argued that employer-provided access to financial coaches can help employees tailor budgets, set achievable objectives, and adjust investment allocations.

The report proposes offering bespoke guidance as an employer benefit, enabling workers to address immediate obligations without compromising long-term goals. According to DeRusso, the availability of professional advice is “paramount” as retirement options grow more sophisticated.

Expanding Investment Options Inside 401(k) Plans

Greg Calnon, co-head of public investing at Goldman Sachs Asset Management, highlighted two emerging solutions: private assets and guaranteed income products. Integrating private market investments into 401(k) plans could diversify portfolios and enhance returns, Calnon said. Meanwhile, lifetime income strategies—such as annuities embedded within defined-contribution plans—aim to provide predictable cash flow during retirement.

Calnon noted that “personalized investing and advice will be essential to maximize the potential opportunity.” While alternative assets may offer higher return potential, he stressed the importance of risk management and individual suitability assessments.

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Employers’ Role in Closing the Gap

The report calls on employers to expand financial wellness programs, noting that 401(k) participation alone may not bridge widening savings gaps. Recommended actions include automatic enrollment at higher contribution levels, company matches that encourage consistent saving, and one-on-one counseling sessions.

Wilson argued that workplace interventions can reduce disparities among demographic groups. He pointed to data showing that employees who receive proactive guidance tend to maintain contributions even during periods of financial stress.

Outlook and Implications

Goldman Sachs concludes that the convergence of stagnant wage growth, elevated living costs, and demographic shifts threatens traditional retirement models. Without targeted guidance and diversified investment options, many Americans may face inadequate income later in life.

Employers that integrate tailored advice, private assets, and income guarantees into benefit packages could help mitigate the looming shortfall. As market conditions and workforce demographics evolve, the report suggests that comprehensive planning will be critical to long-term financial security.

Additional information on practical budgeting and savings tactics can be found in the Financial Planning section of our site.

Image credit: Goldman Sachs Asset Management