Economists often describe the U.S. economy in recent years as “K-shaped,” where higher-income households have seen stronger gains in wealth and spending while lower-income families face more financial pressure.
While financial precarity is often associated with lower-income households, a February 2026 analysis by consulting firm Kearney suggests many higher earners remain vulnerable as well. Based on federal economic data and consumer surveys, the report looks at factors such as income, debt levels, savings, investments and family support to assess how exposed consumers are to economic shocks.
“You can have good income, but there could be a lot of factors that leave you exposed,” Katie Thomas, lead at the Kearney Consumer Institute and author of the report, tells CNBC Make It.
A household earning $200,000 a year may appear financially comfortable, but if most of that income goes toward a large mortgage, child care, debt payments and other fixed costs, there may be little flexibility if something goes wrong, the study says. In some cases, that household could be more financially exposed than one earning far less but living within its means.
Many high earners say they feel that pressure, with nearly one-third of six-figure earners reporting they are financially “stretched, struggling or drowning,” according to a 2025 Harris Poll survey. That dynamic helps explain the disconnect between high incomes and financial stress, and why a high salary doesn’t always guarantee financial security.
Financial risk can appear at both ends of the K
In Kearney’s analysis, the upper arm of the K begins around $160,000 in annual income, where many households appear financially secure on paper. That’s roughly in line with estimates from Moody’s Analytics placing the top of the K-shaped economy around $175,000 or more in household income.
High-income households also play a large role in the broader economy. The top 20% of earners accounted for about 60% of all consumer spending in 2025, according to an analysis of Federal Reserve data by Moody’s Analytics.
But some of those higher earners are also among the most financially exposed, says Thomas: “Assuming that top of the K is permanently insulated is not the right assumption.”
Kearney’s report describes certain households in that group as “on thin ice.” These are people with high incomes but also high costs, such as large mortgages, debt payments and expensive living costs. If much of their income is already committed, even relatively small disruptions — a job loss, higher interest rates or unexpected expenses — can quickly strain their finances.
At the other end of the spectrum, vulnerability is more straightforward, Thomas says. Households earning $30,000 a year or less often face financial pressure simply because rising prices, borrowing costs and job instability leave little room for unexpected expenses.
Why cash flow can matter more than income
Some financial advisors say that financial stability often comes down to cash flow, or how much room households have in their budgets after paying essential expenses.
“We work with many higher-income households who look comfortable on paper, but once you actually look at cash flow, things can be tighter than expected,” says Joon Um, a certified financial planner with Secure Tax & Accounting in Beverly Hills, California. “The biggest issue we see is high fixed costs — housing is usually the largest one.”
Mortgages, property taxes, insurance and upkeep can consume a large share of income, particularly in expensive housing markets like Los Angeles or New York. Add child care, car payments and other recurring expenses, and much of a household’s income can become locked into monthly obligations.
Another common issue is low liquidity, Um says, meaning some households have strong incomes and valuable assets, but relatively little cash available for unexpected emergencies.
If income drops or something unexpected happens, there may not be much of a cushion. In those situations, a high salary can mask a fragile financial position when spending and fixed costs rise alongside income, Um says.
“Even though inflation has slowed, prices are still rising, and many households are experiencing that pressure in their day-to-day expenses,” says Justin Rice, a CFP with Personal Wealth Strategies in Hamilton, New Jersey.
Rice says he sees this happen often with higher-income households with high fixed expenses: “Financial stress is not determined by income alone.”
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