Let’s say you’re in great shape, financially speaking. You earn a middle-class lifestyle and enjoy all the perks that come with it: a better home, financial security, and a growing nest egg.
But inflation creeps up on us all. And according to experts, you may: I don’t think I can afford it There won’t be any more in the next five years.
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“We’ve seen how much the middle class is now enjoying some important aspects of life,” said real estate expert and owner Alyssa Huff. sell the house as is. “Own a home with a manageable mortgage, use student loans to send your kids to college, buy health insurance, save for retirement, and splurge on the occasional luxury. The same is true.”
But looking to the future, he is concerned about the future: “Rising housing costs, tuition fees, health care costs, and inflation could make life even more difficult for middle-class families over the next five years.” Ta.
Huff said it may be harder to buy a home, send a child to college or save for retirement. Even simple pleasures like going on vacation or buying nice things can become more difficult.
Good news? If you know these cost increases will occur, you can better prepare.
“As someone who cares deeply about their financial well-being, I urge middle-class people to start making smart plans now to weather these potential storms and keep their dreams within reach,” Hough said. I strongly encourage you to start.”
Here are some costs you should be aware of that will continue to increase in the future.
long family trip
“The tradition of extended family vacations, especially overseas, will probably become increasingly unaffordable for the middle class in the coming years,” said CEO David Kemmerer. coin leisure. “Traditional family vacations have already felt obsolete over the past decade due to a variety of factors, including COVID-19 and inflation.”
But with middle-class incomes not increasing as much as they used to, he said, the money that would have gone toward travel will likely be spent on things like housing and other necessities.
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new car
Melanie Masson, Financial Expert clearancesaid that the middle class will not be able to buy new cars in the not-too-distant future.
“Vehicle prices have increased dramatically over the past four years and are likely to continue to get more expensive,” Masson said. “Safety features, self-driving technology and EV batteries are contributing to price increases.”
Private school tuition fees
According to CEO Jake Hill, dead hammerIf inflation and high demand continue on their current trajectory, the middle class will no longer be able to afford private school tuition in the next five years.
“Tuition fees have been rising steadily over the years and are very likely to outstrip middle-class incomes in the near future,” he said.
He said this is especially true when looking at the overall picture of spending for middle-class families, including housing costs, which continue to rise.
home ownership and real estate
“Honestly, at this rate, mortgages and home purchases may become unaffordable for the middle class in five years,” CEO Carter Suess said. credit summit.
Especially in certain high-demand areas of the country, it can still be quite difficult to get an offer on a home accepted unless you bid well above the asking price, forgo key elements of inspection and sale, and make a cash offer. he said.etc
“We do see that homeownership is becoming increasingly unaffordable for average middle-class people,” he said.
When it comes to owning real estate, tax, trust and estate attorney David Brillant says: Brilant Law Office One area of particular interest in California is real estate.
“Recent adjustments to property tax laws, such as those facilitated by Proposition 19, [in California]the unified deduction for inheritance and gift taxes may change,” he said, adding, “There is great concern that it will become increasingly difficult for the middle class to own and inherit real estate.
“Through our work with clients addressing these tax changes, we have highlighted how significant the financial burden can be, particularly with the proposed cuts to the Consolidated Credit. It will make your gift even more attractive.”
Medical bills
Other important areas to focus on, experts say, are long-term care and medical costs.
“These costs have been steadily increasing and have outpaced general inflation rates for years, and there is no sign that this trend is reversing,” said financial advisor and owner Mike Kojonen. Major preservation services.
He said many middle-class families may not be prepared for the financial burden of long-term care, whether for themselves or an elderly parent.
“My work with clients has highlighted the importance of integrating health care planning into a comprehensive retirement strategy,” he said. “Without proper planning, affordability of needed long-term care services can become a major challenge and retirement savings can be depleted prematurely.”
Leisure and travel after retirement
Kojonen said that for those considering retirement within the next five years, another aspect to consider is post-retirement leisure and travel.
“For many people, the desire to explore and enjoy leisurely activities is a central part of their retirement dreams.”
But as rising costs and inflationary pressures impact everything from airfares to accommodations and meals, what was once considered an attainable goal for the middle class is soon becoming a luxury. He said it was possible.
“This change may bring about necessary adjustments to retirement planning, highlighting the need to build more robust savings strategies to keep up with the rising costs of leisure and travel.”
“Safe” investments for retirees
According to Kojonen, the concept of a “safe” investment may also change.
“Traditionally, bonds and bonds have been considered the cornerstone of retirees’ portfolios, providing both income and stability,” he said.
But with interest rates at historic lows and inflation rising, real returns on these investments may not keep pace with inflation, he said.
“This reality poses a risk to the maintenance of purchasing power for many middle-class retirees,” he explained. “When advising clients, it is increasingly important to explore diversified investment strategies that provide both growth and protection against inflation, ensuring that your retirement savings can support your lifestyle and goals. .”
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